Invest in Germany
Why Invest in Germany?Updated on Wednesday 23rd November 2022
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Germany is a very attractive country in terms of foreign investments as it has the largest economy in the Europe. Among Germany’s strengths, investors will find the industry, the specialized labor force and the geographical position of the country in the heart of the continent.
Benefits of investing in Germany
There are a lot of benefits for foreign investors looking to expand their business or set up new companies in Germany. Along with the developed infrastructure investors will benefit from:
- Advanced technology that will ease integration in many industrial sectors;
- The workforce that is highly specialized and educated and most of the German employees speak English so communication barriers are almost inexistent;
- It is well-known that Germany is the second biggest exporter and the third largest importer in the European Union, so the trading is one of the country’s most important generator of income;
- There is no discrimination in terms of taxation or company registration between national and foreign investors;
- The taxation system in Germany is very competitive compared to other EU member states’ taxation systems;
- The corruption is limited to a minimum which is in the best interest of foreign investors;Foreign investors who want to invest in Germany can buy and own properties in Germany without the risk of being expropriated;
- Foreign investors are allowed to have a majority shareholding in a German company;
Foreign investment policies in Germany
The government encourages foreign investment in Germany through attractive tax deductions, financial loans for enterprisers investing in research and development and other incentives depending on the sector the investor wants to put money into, but generally the government allows foreign investors are allowed to access all sectors, such as telecommunication and can wholly own German companies.
Businessmen who want to invest in Germany should know that this country has signed bilateral investment treaties (BITs) with numerous countries and double taxation agreements with about 90 countries.
Incentives for foreign investors who are thinking of setting up a business in Germany
The Government offers numerous incentives to both local and foreign investors who invest in Germany. The programs are usually grouped in packages focusing on:
- the reimbursement of investment costs,
- operational incentives for subsidizing the costs of investments.
Among these the most important are:
- the cash incentive programs,
- the public loan programs,
- the public guarantee programs,
- employment incentive programs,
- research and development incentives.
The incentives are granted in different manners depending on the industries they address. However, there are certain eligibility criteria the companies must meet before receiving any incentive or subsidy. Our lawyers will offer you relevant information about all the available investment incentives and can help you invest in Germany.
Investment sectors for foreign investors
Foreign investors have many opportunities in many sectors in Germany and some of them will prove to bring in a high income. Some of these sectors are:
- Consumers goods- Germany has the largest population in the EU, thus investing in the food industry or the machinery industry might prove very profitable;
- Tourism- Germany is a an appealing destination for tourists so entrepreneurs can invest in tourism facilities and accommodation;
- Education- Germany is very renowned for its specialized and educated workforce, thus investing in school and colleges is a big opportunity for foreign investors.
Other Important Investment Industries in Germany
The healthcare industry in Germany
One of the most spectacular investment industries in Germany is the healthcare sector, at the moment. This industry has started to develop several years back and now offers some of the best investment opportunities. It is estimated that the healthcare industry generates over 300 billion euros per year and plays a major role in Germany’s economic growth. If you are interested in setting up a company in Germany in this industry, you hould know that its most developed branches are the pharmaceutical and the medical technology ones. It is also one of the industries attracting one of the largest number of foreign specialists seeking employment in Germany.
Setting up a company in Germany in the IT&C industry
Foreign investors who want to invest in Germany in the information technology and communication industry, shortly known as the IT&C sector, has a long tradition in this country. This industry has not slowed down, but continued to develop during the years. The German IT&C industry is currently one of the most innovative in the world, holding over 4% of the global ITC revenue in 2014. The German IT&C market is also the fourth largest market in the world.
IF you want to open a business in Germany in the IT sector and need assistance you can request the services of our local experts.
The engineering industry in Germany
Engineering is also one of Germany’s best industries to invest in. Among the most sought and developed segments of the engineering industry are:
- aviation engineering,
- electrical and electronics engineering,
- automotive engineering,
- mechanical engineering.
Foreign investors who want to invest in Germany in this industry, should know that this sector is the most developed in Europe, Germany being most European countries’ supplier of parts for different appliances and electrical spare parts.
Investors in Germany can benefit from quality services that will help them manage their local business. Our German accountants offer bookkeeping services, assistance for making the needed tax payments and filing the tax returns, VAT registration, and many more. We also assist with issues concerning social security contributions or audit, as well offer services for tax optimization.
German Legislation for Foreign Investment
There are no restrictions when it comes to investing in Germany and the law makes no difference between German nationals and foreigners. Intellectual property is protected by patent laws. Investors also benefit from laws that enforce them to plan and implement their investment effectively.
The Foreign Trade and Payments Act
Germany encourages and supports foreign direct investment (FDI). The German legislation for FDI encourages the principle of freedom of foreign trade and payment transactions as shown in The Foreign Trade and Payments Act (Außenwirtschaftsgesetz).
This Act permits restrictions on FDI due to foreign policy, foreign exchange, or national security. But such restrictions are rarely imposed. There is no broad authority to review foreign direct investment (except for the defense and cryptology sectors).
Imports in Germany do not require a special permit or control declaration. This is applicable to both German companies or partnerships and residents also, with a registered office in Germany. However, there are goods submitted to import duties even if their number has decreased over the years.
Only agricultural products, food, pharmaceuticals, chemicals, and goods of strategic relevance have certain import restrictions. In such cases import licenses and surveillance documents may need to be obtained before importing to Germany.