Residence & Visa: What counts as salary – and what doesn't?

You've secured a top international talent from the USA , Great Britain , or Canada for your company, signed the secondment agreement, and put together a generous relocation package. Housing allowance, tuition fees, flights home, and an attractive mobility allowance – on paper, the compensation is far above the German market average. But just a few weeks later, the disappointment comes from the visa office or the Federal Employment Agency: the application is rejected or stalled because the minimum salary threshold isn't officially met. In our legal practice, we see this exact scenario time and again. Many HR teams and global mobility managers are lulled into a false sense of security because, for German visa procedures, what matters isn't how generous a compensation package appears overall, but rather how it's legally structured.

Why is the Federal Employment Agency rejecting the offer despite the high overall package?

The crux of the matter regarding the posting and employment of foreign skilled workers lies in the strict separation principle of German authorities. When granting approval for employment under Section 39 of the Residence Act (AufenthG), the Federal Employment Agency and the immigration authorities scrutinize very carefully whether the statutory or collectively agreed minimum salary thresholds are met – as is the case, for example, with the EU Blue Card according to Section 18g of the Residence Act or with skilled workers with academic qualifications according to Section 18b of the Residence Act. What an HR or finance department considers a fixed component of the total compensation is often classified by the authorities as mere expense allowances.

The crucial legal question for the authorities is always: Is it compensation for actual work performed, or a payment earmarked to cover additional costs? All flat-rate payments and benefits that offset work-related expenses—such as housing allowances, relocation grants, or tuition reimbursements—are rigorously deducted from the salary calculation by the auditing authority. Even if the total income is in the six figures, only the adjusted base salary remains for legal assessment.

Which allowances actually count towards the minimum salary?

In administrative practice, there is very little leeway regarding eligible allowances. Generally, two types of additional benefits can be successfully argued to visa authorities as part of the salary: the Cost-of-Living Allowance (COLA) and the so-called functional allowance. A COLA is recognized if it compensates for the real loss of purchasing power between the country of origin (e.g., USA or UK ) and Germany and is based on a specific indexation. However, it must not be a flat-rate bonus. The functional allowance, on the other hand, is accepted if it reflects a permanent expansion of the scope of duties and responsibilities during the assignment .

However, even in these two exceptions, a central criterion determines the success or failure of the visa application: The decisive measure for recognition by the authorities is the irrevocability and guarantee of the remuneration.

As soon as remuneration is variable, the authorities consistently reject its inclusion in the income threshold calculation. Performance-related bonuses, discretionary premiums, or success-based variables may be contractually agreed upon, but are considered uncertain under visa law. Since fulfillment of the income threshold—for example, for the EU Blue Card according to Section 18g of the German Residence Act—must be guaranteed for the entire validity period of the residence permit , the authorities do not accept any risk of fluctuation. Consequently, an allowance only counts if it is paid unconditionally, at a fixed rate, and guaranteed monthly.

How can employers legally resolve the salary issue for inbound international assignments ?

When recruiting top talent from non-EU countries to Germany, and the base salary falls just below the statutory thresholds, adhering to complex international allowance structures often leads to unnecessary delays. In our legal practice, we advise employers in such cases to pragmatically realign their priorities.

Instead of spending a lot of time trying to justify complicated US- or UK -style allowances to the immigration authorities or employment agency, the solution often lies in a simple contract adjustment: The most effective strategy is to have disputed allowances removed and instead raise the contractual base salary directly to the required minimum salary threshold.

For HR departments, this means a clear balancing act. The overall financial impact on the company often remains the same, but the legal classification changes abruptly from a variable or earmarked benefit to a guaranteed fixed salary. This eliminates any grounds for objection by the authorities and significantly speeds up the visa process.

Conclusion: Avoid visa delays with the right salary structure

A seemingly generous compensation package does not protect against visa refusal . To bring executives and specialists from the USA , Great Britain , Canada, or other third countries to Germany without bureaucratic hurdles, employers must adhere to the strict criteria of German immigration law. The Federal Employment Agency does not recognize variable and earmarked expense allowances as income. Those wishing to avoid onboarding delays should focus on guaranteed, fixed salary components from the outset or specifically increase the base salary to the required threshold. As a law firm, we are happy to assist you in ensuring your secondment approvals and employment contracts comply with visa requirements before submission .