Country GuideGermany

From Global Connections

Germany ranks seventh in the world as a recipient of foreign direct investment (FDI). The country has a welcoming attitude towards foreign investment and the UNCTAD World Investment Prospects Survey 2013 – 2015 ranked Germany as the most attractive business location in continental Europe.

Germany ranked 15th in the World Bank's 2016 Doing Business rankings, retaining the same position as the year prior. While generally an open and transparent country to do business in, Germany's overall ranking is devaluated by its low score in Starting a Business, ranking 107 out of the 189 economies analysed in the study. Nevertheless, it was recognised that since the last study, Germany had enacted reforms to make starting a business easier by making the processes more efficient and less costly.

Key facts about starting a business in Germany:

  • It takes nine procedures and approximately 10.5 days to start a new business in Germany; this process is detailed in the Doing Business in chapter
  • Obtaining a residence title for permission to work can take up to four months to process and costs up to EUR250; employment regulations are discussed in detail in the Labour chapter
  • Obtaining a building permit takes approximately 25 days and costs EUR6,451
  • Germany ranked second in a comparison of 36 countries' intellectual property systems that assesses cost, speed, quality of judges/tribunals, quality of advice and the fairness and predictability of decisions; intellectual property rights are discussed in the Legal overview chapter
  • Companies applying for a listing on the stock exchange must, amongst other requirements, have a minimum market value of EUR1.25 million and demonstrate a three year trading history; this is discussed further in the Finance chapter

While establishing a business and investing in Germany is generally a straightforward process, it is important to understand the nuances of any local regime. The manner in which people conduct business in Germany may differ from the home countries of investors. Furthermore, variations on these distinctions may exist in different regions of Germany and the industry in which a company operates.

German is the lingua franca of business, with over 95 per cent of the population speaking German as their first language. Dress codes in the workplace are typically understated and conservative; nevertheless, this will vary according to industry.

Germans value order and hierarchy. Time is managed carefully and therefore punctuality is critical. A handshake is the typical greeting and will be used at the beginning and end of a meeting. Gift giving is not part of German business etiquette.

Those looking to establish a business in Germany will often look to countries across Europe as alternative options. While membership of the EU ensures parity in many aspects of the legal, tax and audit regimes, Germany can be differentiated on the following factors:

  • Germany is the largest economy in Europe and the fifth largest in the world by GDP (PPP)
  • Over half of the EU population lives within 500 kilometres of Germany’s borders
  • Germany is ranked 1st across Europe for the quality of its infrastructure, further details are discussed in the Infrastructure chapter
  • Germany ranked 4th in the WE Forum Global Competiveness Report, the second highest ranking of a European country, only behind Switzerland
  • 81 per cent of the German workforce have been trained to university entrance level or possess a recognised vocational qualification
  • German companies represent 10 per cent of European manufacturing companies and generate 28 per cent of the total EU turnover in the sector; Germany's major exports are discussed in the Trade section
  • Germany's 'INDUSTRIE 4.0' initiative aims to establish Germany as a lead market and provider of advanced manufacturing solutions

Despite Germany's strong economy, the country is set to be challenged by its aging population. According to the UN, the population is set to decline from a peak of 82 million in 2002 to 74.5 million by 2050. Furthermore, by 2050, projections indicate that there will be fewer than two working-age persons for each elderly person. The government has already begun implementing initiatives to help the situation, such as raising the retirement age, but more must be done to sustain economic growth.

This guide has been developed to provide businesses with an overview of Germany, its legal regime, start-up and market entry considerations, tax and customs requirements and a general summary of the factors that may affect the decision to do business in Germany. However, the information contained in this document is generic in nature and should not be acted or relied on without obtaining specific professional advice.

Please note that the Country Guides may only be available in English.

Useful Links

1 Company Register
2 Federal Central Tax Office
3 Federal Office for Information Security
4 German Customs
5 Federal Office for Migration and Refugees
6 German Patent and Trade Mark Office
7 Germany Trade & Investment
8 Federal Agency for Work

 

Sources

1 UNCTAD World Investment Prospects Survey
2 Doing Business Rankings
3 Work Permit - Used Practical Law which is a legal service Grant Thornton subscribes to
4 IP Index
5 Over half of the EU population lives within 500 kilometres of Germany’s borders + Germany Manufacturing Company Statistics
6 Global Competitiveness Report + Infrastructure Ranking
7 Workforce Training
8 German Aging Population

 

Download Country Guide - Germany (1.86MB, PDF)

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