Multi-national businesses starting in Germany that invest in R&D activities, sustainable energy and production facilities are eligible for Government grants and incentives including:

• Non-repayable grants; and
• Public grants that do not have to be repaid if used properly; and
• R&D tax incentives; and
• Loans granted by specialized development banks (in some cases extended by commercial banks, “Hausbankprinzip”), whose loan interest rate is significantly
• lower than the usual market interest rate; and
• Labour incentive programs including recruitment, training support and wage subsidies; and
• IZ scheme that provides monetary aid for investment in East Germany. This program can be combined with the GRW scheme can get cost coverage up to 50% for small firms and 40% for medium-sized enterprises;
• The KfW Development Bank provides loans, private equity and mezzanine financing for eligible SMEs

Germany’s technological innovation and manufacturing strength, presents opportunities for our multi-national companies because:

• As the gateway to the European market, Germany boasts unparalleled infrastructure, and a workforce recognized for its qualifications and diligence.
• Germany is one of the most stable trading economies in the world, offering foreign investors a secure and well-developed economic and political framework. The country has a strong legal system with governmental protection that allow companies to safeguard their industrial and intellectual property after company registration; and
• Germany remains the world’s fourth largest economy in terms of nominal GDP and is the third largest exporter behind the US and China, specialising in advanced technological goods in the automobile, machinery, electronics and pharmaceuticals sectors; and
• Germany is the largest consumer market in the European Union, accounting for 25% of EU GDP. With a GDP per capita of nearly US$50,000, it ranks among the top 10% of countries worldwide; and
• Germany is Europe’s Global Logistic Hub. Transportation and logistics are world-class, with over 300 airports, 23 heliports, and 27,000 miles of railway in addition to 400,000 miles of perfect, pothole-free paved roadway; and
• Germany is a member of key inter-governmental organisations including the EU and OECD and the WTO; and
• Companies looking at doing business in Germany will find an extensive range of industries ripe for investment and known for their innovative approach to production and advanced use of technology; and
• As a member of the European Union, Germany generally has no restrictions on imports and exports within the customs territory of the Union. Goods imported from non-EU countries which are in short supply in the EU are subject to a full exemption of duties. Imported goods may be stored in the German free ports of Deggendorf and Duisburg without incurring any duties; and
• Products with the ‘Made in Germany’ seal stand for the highest quality worldwide. This has played a significant role in maintaining Germany’s position as a world export champion for many years; and
• Germany has double tax treaties with about 100 countries including the US and all European countries; and
• With a sale to another EU country, you are making an intra-community sale. There are no physical borders within the EU. It is an internal market within which there is free movement of goods. This means you do not have to submit an export declaration and your customer does not have to pay import duties on your products; and
• Germany is one of the largest e-commerce markets in Europe, second only to the UK. It is attractive for our multi-national Clients’ looking to export to Germany because the huge number of e-commerce consumers (nearly 70 million by 2027) and a high e-commerce penetration with 83% of the population bought online in 2024.

German workers tend to be highly-skilled, with great emphasis placed on higher education and professional qualifications. Renowned for their focus and attention to detail. Furthermore:

• The German employees are known for their excellent proficiency in both spoken and written English, helping to eliminate the cross-cultural risk of ambiguity and misunderstanding; and
• German employees are professional and highly skilled individuals. They naturally work hard to meet their objectives, KPIs, and deadlines; and
• Germany’s well-educated and trained workforce is key to the country’s high level of productivity and innovation. More than 86% of the German workforce have received at least an upper secondary education. Germany’s vocational education system ensures a steady supply of highly skilled workers, particularly in the engineering and manufacturing sectors.

With around 100,000 IT companies employing approximately 1.2 million people, Germany is one of the largest information and communication technology (ICT) markets in the world. ICT is a priority sector for the German government including digital infrastructure, the digital economy, digital workplaces, innovative governance, digital environments in society, education, research, science, media, and security. Therefore, German industries are hungry for new technologies, including Germany’s large and conservative banks. After German company registration, key opportunities for our multi-national Clients’ include:

• Industry-specific software and services that shape changes in production processes and value chains; and
• Intelligent process automation, preventive and predictive maintenance, Open API, low code app platforms, zero trust; and
• FinTech, (Holistic) IT security, Health IT, RetailTech; and
• Importance of IT hardware (shortage of chips/ semiconductors); and
• Cutting-edge and niche products & services that leverage emerging technologies like i) Artificial intelligence (AI)/machine learning (ML) and ii) Metaverse/Web3.0 and iii) Distributed ledger technology (DLT)/Blockchain and iv) Quantum and v) Cloud computing and vi) 5G and vii) Certification authentication and verification (CAV); and
• Key segments and topics of interest include cybersecurity, internet of things (IoT), big data, health IT, cloud computing, business IT: ERP, data centers, smart social business platforms, integrated systems, virtual & augmented reality, and digital factory; and
• Government policy objectives include cybersecurity, the digitization of the German economy and the expansion of the German broadband network
• We recommend our multi-national Clients’ attend Germany’s major trade shows including i) the Hannover Trade Show and ii) the embedded world and iii) it-sa expo.

One of the major issues of doing business in Germany is dealing with the complex bureaucratic and legislative hurdles. For example:

• According to the World Bank’s report, Germany ranks 125th out of 190 countries in terms of the difficulty of starting a business. There are complicated company registration and business establishment procedures including various registrations with and applications to i) the local trade offices and ii) local tax offices and iii) local chamber of commerce; and
• On top of the heavy registration requirements and corporate oversight by the government, German laws govern everything from complex tax reporting, consumer protection, employee rights, and product liability; and
• Germany has strict customs procedures that can be time-consuming and complex. Shippers need to provide detailed documentation to comply with customs regulations, to ensure the shipments can be cleared without delays. Germany imposes import taxes and duties on many products which will add to shipping costs; and
• Businesses must be careful to properly process social security payments, make relevant deductions, and pay mandatory Christmas bonuses and 13th-month pay packets; and
• Germany has some of the strictest employment laws in the world, so understanding the regulations and your responsibilities as an employer is essential. There are strict rules when it comes to dismissing employees, holiday pay, sick leave, etc.
• The country follows strict environmental protection rules, which require that new products obtain certification and license approvals;

German tax law is extremely complicated and preparing taxes is a huge undertaking that requires significant time and knowledge to get right. After German company registration, companies are liable for 14 different business taxes that must be paid in nine payments per year, requiring an average of 218 hours of business time. Examples of specific challenges include:

• Depending on the city of domicile, the effective corporate tax rate typically ranges between 27.5% and 39%; and
• The Municipal Real Estate Tax can range between 1.5-2.3%; and
• A 5.5% solidarity surcharge is levied on the corporate income tax; and
• Quarterly payroll tax returns include i) income tax and ii) church tax and iii) solidarity surcharge;
• Tax resident employees are subject to income tax on their worldwide income. The income tax rate ranges from 14% to 45%. Germany has high levels of personal taxation, the second highest tax wedge among the 38 OECD member countries, with the average single worker in Germany liable for a tax wedge of 47.8% compared with the OECD average of 34.6%.