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Germany is one of the world's most advanced market places. It is the world's third largest economy in USD exchange-rate terms, the fifth largest by purchasing power parity (PPP), and the largest economy in Europe. Germany is politically as well as economically one of the most important countries in Europe and the European Union.
Germany uses the common European currency, the Euro, and its monetary policy is set by the European Central Bank in Frankfurt, Germany. The German economy is heavily export-oriented. German exports account for more than one-third of national output. As a result, exports traditionally have been a key element in German macroeconomic expansion. Germany is a strong advocate of closer European and worldwide economic and political integration, and its economic and commercial policies are increasingly determined by agreements among European Union (EU) members and EU single market legislation.
Due to its geographical position, its good infrastructure and its legal certainty Germany is the first choice for many foreign companies when establishing a Representative Office or a subsidiary for their entry into the European market.
Establishing an entity in Germany provides companies with great opportunities to expand their business in Germany and greater Europe. In 2011 Consultinghouse's "How To Germany" service guided companies from 16 countries and more than 10 industries to start and grow business in Germany and Greater Europe. We also provided support to existing business in Germany.
Through the creation of a sustainable market entry strategy, in cooperation with our clients, we build the confidence needed to achieve the most out of their individual business plan. We are looking forward to supporting more foreign clients to start and grow new business in a strong German economy.
German wholesale and retail companies' purchasing departments source products from and have subsidiaries in a variety of locations around the world. These business partners are advantageous for companies desiring to sell goods to a German subsidiary in their home country. This option allows businesses to communicate in their own language and without having to leave the country. More information on the German wholesale and retail field is available in our respective business sector profile.
Selling to German trading houses and merchants is a very low-risk means of entering the market for the exporter, since trading houses/merchants take care of finding customers and completing the sales themselves. It may, however, take some effort to convince the German business partner to take on the risk of stocking his/her goods. Assistance in finding potential German wholesalers, retailers, trading houses and merchants is available from the Federation of German Wholesale and Foreign Trade (BGA).
German Commercial agents and (sole) distributors sell products for one or several companies on a commission basis without actually stocking the goods themselves. This method of distribution is attractive to both parties. Companies only pay a commission when sales have been made and agents/distributors are not required to keep expensive stock on hand. Further information on finding a commercial agent in Germany is available from the German CDH (National Association of German Commercial Agents and Distribution).
For long-term market penetration, many businesses choose to set up a subsidiary in Germany. The subsidiary has the advantage of being located in Germany and, thus, being easily accessible to wholesale and retail customers in the country and the Single European Market. This accessibility and the opportunity to conduct business in German, increases the company's attractiveness for potential customers. Establishing a subsidiary in Germany is more complex than setting up any of the other distribution channels, however, Germany Trade and Invest's free investor consulting services can greatly simplify the process.
Company Registration in Germany
The Company Register provides a centralized point of access for company information and is free of charge.
All companies are required to file annual accounts with the Federal Gazette Business Register (Bundesanzeiger Verlagsgesellschaft) and to publish them once a year.
The Common register of the German federal states is a portal providing access to registers of companies, cooperatives and partnerships registered in all federal states in Germany.
Company information can also be obtained from the European Business Register (EBR).
- See more at: http://www.icaew.com/en/library/subject-gateways/business-management/company-administration/knowledge-guide-international-company-registration#sthash.uyhjSvqH.dpuf
10 Reasons why companies invest in Germany
Germany is one of the world's leading industrial nations. It offers a large market, a central location in Europe and a high level of innovation. Do you need more reasons to invest in Germany?
1. Large Market
With 82 million inhabitants, Germany is the European Union's most populous country and therefore also the largest market within the EU. With a gross domestic product of more than 2.2 trillion Euro, Germany is the largest economy in Europe and the third strongest economy in the world.
2. Central Location
Germany's central location in Europe makes it a hub for goods and services. Germany more than other countries benefits from EU enlargement. As a result, it is the only country among the seven most important industrialized nations to increase its share of world trade since 1995.
3. Open Market
Germany is an open market and warmly welcomes foreign investors. That is demonstrated by the 22,000 foreign enterprises that have established businesses in Germany and now employ more than 2.7 million people. The German market is open to entrepreneurial investment in practically all areas. There are no longer any state-controlled industries. Germany is receiving increasing attention from private equity firms and hedge funds due to its highly attractive companies legislation and favourable investment conditions.
4. International Location
More than 7 million foreigners live in Germany. Several metropolitan regions have prominent foreign communities with their own schools, churches, shops and restaurants. For example, a large number of Japanese live in the Düsseldorf region, Frankfurt is home to many Koreans and there is a thriving Chinese community in Hamburg. Approximately 70% of German blue- and white-collar workers can speak more than one language.
5. Qualified Personnel
Germany offers an exceptionally well-qualified, motivated and conscientious workforce. German employees' high standard of knowledge and skills is internationally recognized. The demand for professionals is met by 383 institutions of higher education. Another pillar of the German training system is the "dual system" of vocational education, which combines workplace training and school instruction and produces an acknowledged high standard of training closely geared to the needs of industry.
6. High Level of Innovation
Statistically, Germany has 277 international patents per one million inhabitants - more than anywhere else in the world. The close cooperation between industry and world-famous research institutions like the Max Planck and Fraunhofer Institutes, swiftly transforms new ideas into products for the world market.
7. Highly Developed Infrastructure
Germany has a closely knit network of roads, railways and international airports. This guarantees swift connections. Frankfurt Airport is renowned as an international hub, whilst the Port of Hamburg is one of the largest container transshipment centres in Europe. Communications infrastructure is exceptionally well-developed throughout the country.
8. Legal Security
Germany is a modern constitutional state with transparent and reasonable laws, the advantages of which are internationally recognized. The German legal system has served as a model for legal systems in many other countries and international studies have shown that German legal security is highly regarded by investors. Out of all countries, Germany ranks fourth in terms of legal security.
9. Strong "Mittelstand" (SME's)
The German economy is characterized by privately owned small to medium-sized enterprises, the Mittelstand, or SMEs. 85% of all businesses are SMEs. This makes German industry very flexible, multifaceted and competitive. Many of these highly specialized firms are international market leaders in their field, the so-called "hidden champions".
10. World Famous Trademark
Products with the "Made in Germany" seal stand for the highest quality worldwide. This has played no small part in maintaining Germany's position as a world champion exporter for many years. The automobile, mechanical engineering, electrical engineering and chemical sectors are particularly strong. Industries of the future, such as environmentally friendly energy production and nanotechnology, in which the number of patent applications is doubling every two years, are steadily gaining in importance. All of this means that foreign investors can reap the benefits from the "Made in Germany" seal of quality.
Germany Market Access
In accordance with its European Union membership, Germany applies the European Union (EU) rules that are in force in all European Union countries. While the EU has a rather liberal foreign trade policy, there is certain number of restrictions, especially on farm products, following the implementation of theCAP (Common Agricultural Policy): the application of compensations on import and export of farm products, aimed at favouring the development of agriculture within the EU, implies a certain number of control and regulation systems for the goods entering the EU territory.
Moreover, for sanitary reasons, regarding Genetically Modified Organisms (after being allowed in the European territory), their presence should be systematically specified on packagings. The beef cattle bred on hormones is also forbidden to import.
The BSE crisis (often called the "mad cow disease") urged the European Authorities to strengthen the phytosanitary measures to make sure of the quality of meats entering and circulating in the EU territory. The principle of precaution is now widespread: in case of doubt, the import is prohibited until proof is made of the non-harmfullness of products.
Since the first of January 1993, the European Union, of which Germany is part, has been a single market, without any customs barriers, which ensures free circulation of goods. On May, 1st of 2004, ten "candidate countries" became new members of the European Union: Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, the Slovak Republic, and Slovenia. Trade within the European Union is totally free from customs duties, provided that the merchandises' country of origin is one of the 25 European Union Member States. Nevertheless, when introducing merchandises into Germany, exporters shall fill in an intrastat declaration.
When the country of origin of the merchandises which are exported to Germany is not part of the European Union, customs duties are calculated Ad valorem on the CIF value of the goods, in accordance with the Common Customs Tariff (CCT).
The duties for non-European countries are relatively low, especially for manufactured goods (4.2% on average for the general rate), however textile, clothing items (high duties and quota system) and food-processing industry sectors (average duties of a 17.3% and numerous tariff quotas, PAC) still know protective measures.
In order to get exhaustive regulations and customs tariffs rates regarding their products, exporters shall refer to the TARIC code and its database, which includes all applicable customs duties and all customs trade policy measures for all the goods.
Moreover, many bilateral and multilateral agreements have been signed by the European Union, in order to define specific customs duties with the following countries:
- Customs agreements with Australia, Canada, United States, Mexico and South Korea.
- The EU-EFTA (European Free Trade Association) Agreement was signed in 1972 with Iceland, Liechtenstein, Norway and Switzerland.
- Free trade agreements with Bulgaria and Romania that hope join European Union in 2007.
- Mediterranean Agreements, concerning: Turkey, Israel, Jordan, Morocco, Palestinian Authority,Tunisia, Egypt, Lebanon and Syria.
- The ACP agreements, with 95% of the tariff lines with a 0% rate for developing countries in Africa, Caribbean Islands and Pacific. The Cotonou Agreement, signed in the year 2000, defines the new EU-ACP partnership.
- The Generalised System of Preferences (GSP): 54% of the tariff lines of a 0% for developing countries outside the ACP framework.
To get an exhaustivelist of the foreign trade agreements of the European Union, click here.
To get further information on customs policies in the European Union, please check the exhaustive report by the European Commission.
Excise duties are also levied on certain products, especially on spirit.
To get further information on the VAT rates in Germany, please check the list of vat rates applied within the European Union (October 2003), as well as the Ministry of Finances web site.
To get further information on Excise duties, please check the European Union excise duty tables(December 2003).