Starting a Business in Germany as a Nepali Graduate

A Nepali graduate of a German university can start a company in Germany, and the law makes it easier for you than for a founder applying from Kathmandu. The catch is sequencing: which residence permit you hold decides whether you may run a business at all, and the wrong order can put your residence status at risk. This guide covers the permits, the paperwork, the legal forms and the main state start-up grant.

Which permit lets you run a business

Every German residence permit must state whether you may work and under what limits (Section 4a(3) Residence Act). Read the supplementary sheet that came with yours before you register anything.

Students also have the general work limits to respect, explained in our guide to the 140-day rule.

The graduate route: Section 21(2a)

This is the permit built for you. If you completed your degree at a state or state-recognised German university, you should be granted a residence permit for self-employment without the usual tests. A founder from abroad must show an economic interest or regional need, a positive effect on the economy and secured financing (Section 21(1)); a German graduate does not. The one condition is that the business must show a connection to the knowledge you gained in your degree.

So a computer science graduate opening a software studio fits neatly. The same graduate opening a momo restaurant does not, and would be assessed under the stricter general rules.

How long it lasts, and what comes after

The self-employment permit is issued for at most three years. After three years of self-employment you can get a settlement permit (permanent residence) if the business has been successful enough to expect it to keep developing and your income covers you and any dependants (Section 21(4)). Founders older than 45 must also show adequate retirement provision (Section 21(3)), which rarely affects recent graduates.

Freelancer or trade business?

German law treats these differently, and it changes your paperwork.

• Freelancers (Freie Berufe), such as engineers, architects, journalists or translators working on their own account, do not register with the trade office. You register with the tax office no later than four weeks after you start, using the tax registration questionnaire in the ELSTER portal, and you receive a tax number. Freelancers pay income tax and VAT but no trade tax, and they can use simple income-expense accounting (Existenzgruendungsportal).
• Trade businesses (Gewerbe), such as a shop, a restaurant, an import business or a travel agency, register with the local trade office (Gewerbeamt) as well as the tax office.

The tax office decides which category your activity falls into. If you are unsure, describe the work plainly in the questionnaire and let them classify it.

Choosing a legal form

Source for the UG and GmbH figures: the federal ministry's Existenzgruendungsportal. The ministry also warns that a UG's capital should match what the business actually needs; a one-euro company that cannot pay its bills is insolvent. For a graduate without family capital in Germany, a sensible path is freelancer or sole proprietor first, then a UG once revenue is steady.

Money: the EXIST start-up grant

The federal EXIST programme funds founders from universities and research institutions for 12 months. Graduates can apply up to five years after graduating and receive EUR 2,500 a month, or EUR 3,000 with a PhD, with separate budgets for equipment and coaching. You also get a mentor and access to your university's start-up network, and the application starts there (EXIST, start-up grant).

The EXIST page we checked does not set out nationality rules, and a grant does not replace a residence permit. Ask your university's start-up office how a grant would fit your permit before you apply.

A sensible order of moves

1. While you study: join your university's start-up centre, build the idea, talk to customers. Do not invoice anyone unless the foreigners authority has allowed self-employment.
2. After graduating: take the 18-month job-search permit. You may work in any job during it, which pays the rent while the business plan matures. Our post-study permit guide covers the application.
3. When the plan is real: apply for the Section 21(2a) permit with a business plan that shows the link to your degree.
4. Register: tax office (and trade office if it is a Gewerbe), then a business bank account.
5. After three years: apply for the settlement permit if the business carries you.

The other road is a salaried job first on a Blue Card, savings, then the business. It is slower but carries less risk, and the Blue Card has its own path to permanent residence; see our guide to skilled worker visas and permanent residence. If you are weighing a job against a start-up, our job search guide helps with the first half of that decision.

Businesses that link the two countries are the obvious ideas: software teams split between Kathmandu and Germany, trekking and travel services, or importing Nepali tea and handicrafts. All are possible. Under Section 21(2a), though, the business still has to connect to what you studied, so match the idea to your degree.