The benefits and challenges of doing business in Germany

Germany is one of the largest and most stable trade economies in the world, with a strong, well-developed political and economic structure. Investors can rapidly defend their rights and protect their industrial and intellectual property thanks to the country’s strong legal protections.

Germany is also likely to maintain its considerable influence within the Euro and serve as an anchor of regional stability. There are many benefits of doing business in Germany, outlined below, that make the country a great option for business start-up or relocation, however, if you are considering doing business in Germany there are also some challenges that must be considered, such as taxes, registering property and being mindful of their culture.

What are the benefits of doing business in Germany?

1. Deep commitment to innovation

Germany is one of the world’s top ten most innovative countries, with a strong focus on leveraging science for economic gain. The country has a strong track record of effectively turning research into real-world applications. This practical focus has been an engine for job creation and a way to combine German scientific research to benefit society as a whole, from software to pharmaceuticals.

Germany’s government exhibits its strong commitment to applied research by sponsoring research institutes, encouraging the formation of start-up enterprises, and licensing intellectual property to enable academics to transition from academia to other fields.

2. Significant consumer market

With a population of 82.4 million people, Germany is the largest consumer market in the European Union. It is the world’s second-largest importer and third-largest exporter of consumer-oriented agricultural products, and for foreign producers, it is by far the most important European market.

The German marketplace is also a powerful force well beyond its borders. MEDICA, the Hannover Fair, Automechanika, and the ITB Tourism Show are just a few of the world’s largest trade shows where a massive amount of business is transacted. These characteristics, together with Germany’s physical location in the heart of the European Union, make it a cornerstone on which many U.S. companies base their European and global expansion strategies.

3. Investment incentives

Germany has a wide range of incentive programmes and public funding instruments that can be used for a variety of projects. The following are some of the most well-known and popular programmes:

  • Grants from GRW (Germany Trade and Invest). Cash incentives supplied through grants may minimise the cost of establishing new facilities. Large companies can get up to 20% of their qualified investment costs reimbursed, while medium companies can get up to 20% and tiny businesses can get up to 40%.
  • Grants for research and development. Special grants are intended to aid in the development of research and development projects. Interest-reduction loans and other unique collaboration initiatives are among these programmes.
  • Grants for the purpose of employing. The German Federal Employment Agency and individual German states offer a variety of labour incentive schemes designed to help businesses increase their staff.

Invest Region Leipzig can help you gain access to incentives, programmes and grants for business relocation, or start-up in Leipzig, Germany. To find out more please visit: https://www.invest-region-leipzig.com/services/

4. Strong start-up culture

Germany is known for an efficient workforce. The country’s vibrancy, open-mindedness, innovation, and international nature make it an ideal location to launch a business and build a basis for worldwide growth, thanks to its diversity of expertise and contacts.

What are the challenges of doing business in Germany?

1. Paying taxes

Germany’s tax regulations are extremely complicated, even though it gives various tax incentives. Be prepared to put in a lot of time and effort to meet Germany’s tax requirements. Businesses are required to make nine tax payments every year, which takes an average of 218 hours of work time. Processing social security payments is also very time-consuming, taking an average of 134 hours of work time.

Invest Region Leipzig is here to help with what can seem like a daunting task. Please contact Invest Region Leipzig now, or access this brochure produced by Germany Trade & Invest (GTAI), which outlines the process of setting up a business in Germany.

2. Culture

Understanding cultural differences is essential for doing business in any foreign place. This is especially important in Germany, where business etiquette is quite important. To begin, doing business in Germany necessitates punctuality. Any meetings should be scheduled well in advance. Arrive at the agreed-upon meeting location on time.

Maintain a high level of formality in first meetings, addressing executives by their titles. As the business relationship and trust build, allow German business partners to invite more informality. Germans, overall, do not engage in small conversation. Avoid bringing up personal issues like politics or religion. The weather and expressing admiration for the local heritage are usually safe things to discuss.

Although many Germans speak English, any attempt to translate crucial materials for them prior to meetings will be appreciated.

If you are looking for help with understanding and adapting to German culture, Invest Region Leipzig is here to help. Please contact us now.

3. Registering property

New businesses must obtain an extract from the land registry, notarise the transfer agreement, obtain a waiver of pre-emption rights from the municipality, and pay a transfer tax when registering property. It will take about 52 days to accomplish this project.

 Germany Trade & Invest (GTAI) have created a brochure, providing information on registering your business and property in Germany. Click here to access it. 

Need more information on doing business in Germany?

Invest Region Leipzig is the economic development agency for the Leipzig Region in Germany.

As professional consultants with many years of expertise, we support you in all the important steps for the successful implementation of your project: from the choice of the ideal business location and the right office and commercial space to identifying suitable funding and helping you to recruit skilled workers. Our promise: a confidential and free service.

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