Why Germany?

Many foreign businesspeople chose to set up in Germany. German law does not discriminate between Germans and foreigners in the creation of companies, and makes no restrictions on the repatriation of profits. Basically, nothing stands in the way of an ambitious upstart with a little capital and the right idea.

 

Germany is a sophisticated, mature and highly competitive market. British companies sell a huge range of products and services to the country and there are opportunities in almost all areas of business. Plenty of Britons with a dream have taken their chances by starting a business in Germany; ranging from relatively small companies, such as English-language schools, Irish pubs and English-language bookshops, to bigger investments in the technological sector.

 

Germany is the most populous country in the EU, and the second most populated in Europe. It is also a founding member of the European Union, which is based on the free movement of goods, workers, services and capital. Therefore, the German nation could offer your business potential access to a wide market of approximately 500 million customers.

 

 

What is the currency and exchange rate?

 

Germany, like its fellow EU members, uses the Euro.

 

The current exchange rate is: £1 = 1.26 Euros.

 

 

What is the population?

 

Germany has the largest population in the EU, currently standing at just over 82 million.

 

 

How is the weather/climate?

 

Most of Germany benefits from a temperate seasonal climate. This is characterised by warm summers and cold winters; however, prolonged periods of frost or snow are rare. Rain falls throughout the year. The average January daytime temperature is 3C (38F) and midsummer is 22C (72F). Extremes have been known to reach -10C (5F) in winter and 35C (95F) in the hotter months.

 

 

What is the time difference?

 

The time in Germany is GMT + 1, an hour ahead of the UK.

 

What languages are spoken in Germany?

 

German is the official language of Germany. German is one of the Germanic languages. There are two groups within the modern German language relating to their geographic location: the Low German, spoken in the northern part of Germany; and High German, spoken in the southern half of Germany, Austria and Switzerland.

 

 

Will I need to know German, or do they speak English?

 

You will certainly find life easier if you have an aptitude for German. Also, you will be increasing your new business’s chances of success. For example, you can share information with and about your customers and suppliers, or find out in the newspapers about important developments affecting your market.

 

As for English, though, Germany is considered one of the best speakers of the language, and the population generally has an impressive grasp of it.

 

 

Will I need a visa?

 

Like the rest of the EU, British citizens can visit Germany on production of a valid passport. This will cover you for up to three months. Thereafter, a work and residence permit should be obtained from the local Aliens Office (Auslanderamt).

 

 

What can I expect from taxation?

 

The German taxation system is not dissimilar to the structures in other western countries, such as the UK. You pay income tax throughout the year; deducted each time you receive a wage.

 

What follows is the current rate of tax for each wage band (in Euros):

 

Ÿ  0% on income of 7,664 and under

Ÿ  15% on income between 7,665 and 52,152

Ÿ  42% on income between 52,153 and 250,000

Ÿ  45% on income of 250,001 and over

 

 

Economic Overview

 

Germany is one of the world's thriving market economies. It is the world's third largest economy in United States Dollar exchange rate terms, the fifth largest by purchasing power parity (PPP), and the largest economy in Europe.

Germany's affluent and technologically powerful economy displayed vast improvement in 2007 with a growth of 2.6%. After a long period of stagnation - with an average growth rate of 0.7% between 2001 and 2005 and acutely high unemployment - stronger growth led to a considerable fall in unemployment to about 8% near the end of 2007.

 

Germany is an adherent to closer European economic and political integration, and its economic and commercial policies are increasingly determined by agreements among EU (European Union) members and EU single market legislation.

 

The current government, led by Angela Merkel, has initiated reform measures, such as a gradual increase in the mandatory retirement age from 65 to 67. Further steps have also been taken to increase female involvement in the labour market.

 

Growth is currently predicted to fall below 2% in 2008, as the strong Euro, high oil prices, tighter credit markets, and slowing growth abroad take their toll.

 

The German economy is very export-happy, with exports accounting for more than one-third of national activity. Germany’s main exports are:

 

Ÿ  Machinery

Ÿ  Chemicals

Ÿ  Vehicles

Ÿ  Metals

Ÿ  Foodstuff

Ÿ  Consumer electronics

Ÿ  Textiles

Ÿ  Beer

 

And their primary imports, similarly, are:

 

Ÿ  Machinery

Ÿ  Chemicals

Ÿ  Vehicles

Ÿ  Metals

Ÿ  Foodstuffs

Ÿ  Textiles

 

 

 

So, what are the essentials I need to know?

 

Foreign investors must be aware of the applicable EU Laws.

 

Foreign investors are free to adopt any form of business investment, and may acquire a stake in or take control of a company which has already been set up.

 

 

Recruitment

 

Across Germany, you will find no lack of qualified, talented staff. Apprenticeships are common in most sectors, and universities and schools can be located in all the major cities. There is, however, a shortage of IT and computer consultants throughout the country, and a scarcity of trained technical staff around southern Germany. Similarly, in eastern Germany, where restructuring is still taking place, there is also high unemployment. Retraining programmes guarantee a wealth of skilled and semi-skilled employees to draw from.

 

Government employment exchanges are available in all cities and larger towns, and are the most commonly used pools of information for job-seekers and potential employers.

 

 

Regulations

 

There are very few restrictions on which companies or services may do business in Germany. However, the country is well regulated, and it is recommended that you investigate before proceeding with an investment. In particular, this is relevant in the instance of artisans and anything associated with the construction industry. In the case of banks and insurance companies, there are overseeing government agencies. Most other industries and services belong to associations that, to a greater or lesser extent, dictate what can or cannot be done by its members.

 

 

Incentives and financial aid

 

The Federal government is happy to offer your business a helpful range of incentive programmes, including loans and bursaries. Parts of Germany which are not structurally sound can offer grants for up to 50% of capital investment.

 

On a more local level, it is sometimes possible to obtain beneficial rates or a tax cuts. You need to remember, however, that practically no inducements are offered in major cities such as Hamburg, Dusseldorf, Cologne, Frankfurt, Stuttgart and Munich. It is, therefore, up to you to determine whether you’d prefer the benefits of a large city with no incentives, or a smaller location with a financial thrust.

 

 

Representatives

 

In the first instance, it is pretty much essential to send the most senior person of the business. Realistically, this should be you. Either way, whoever is delegated must be in a position to speak for your business in all matters pertaining to starting a company, and have the power and knowledge to make decisions on the spot. If the person concerned can speak German or is a qualified technician, this is obviously an advantage. But the level of responsibility is of utmost importance here.

 

 

What are my possibilities when setting up?

 

The answer to this will obviously depend on the nature of your business.

 

There are obviously a number of legal procedures to complete when setting up a company, the most common of which are set out below:

 

Ÿ  Individual Proprietorship: around 91% of all enterprises are single-proprietor firms (einzelfirma), and these employ 35% of the total workforce.

 

Ÿ  Offene Handelsgesellschaft or OHG is a general partnership.

 

Ÿ  The nearest equivalent to a limited company is a GMBH, short for Gesellschaft Mit Beschrankter Haftung. After single proprietor firms, limited liability companies are the most common. Shareholders' liability is limited to the total amount of legal capital which is set at a minimum of 25,000 Euros.

 

Ÿ  KG short for Kommanditgesellschaft or limited partnership.

 

Ÿ  KGAA abbreviates Kommanditgesellschaft auf Aktien which is a public limited company in the form of a limited partnership.

 

Ÿ  GMBH und COKG is a private limited company within a limited partnership

 

Ÿ  AG denotes Aktiengesellschaft. It is basically the equivalent of a public limited company.

 

Ÿ  Branch or subsidiary of a foreign company. In Germany, a subsidiary (Tochtergesellschaft) is considered to be a separate legal entity distinct from the parent company, and generally takes the form of a GMBH.

 

Contrastingly, a branch (Zweigniederlassung) or representative office (unselbstandige Zweigstelle) is not seen as being disparate, and legal and other transactions are accountable to the parent company. However, under German law there is a distinction between the two kinds of branches. The Zweigniederlassung can, if need be, operate alone, and can in theory exist by itself with its own manager, bank account, etc. An unselbstandige Zweigstelle, however, normally cannot. Once trading start, the former must register in the commercial register of the local courts, whereas the latter only need notify the local trading office

 

Ÿ  Joint Venture Company (JVC). An alternative to setting up a company or a branch office is to establish a JVC. The definition of a JVC is: an undertaking established between a foreign (non-resident) company and a domestic (resident) company, or another foreign company, in order to start up or improve distribution, acquisition, production or research and development. A JVC may be formed with any of the company formations described above, but in practice a GMBH has certain advantages.

 

 

What procedures must I take to establish myself?

 

Before you launch your new firm, you must deal with a few formalities and register your firm with the following authorities:

 

The Tax office (Finanzamt)

 

If you are offering a professional service, you only need to apply for a tax number from the tax office.

 

 

The Trade Office (Gewerbeamt)

 

Anyone else setting up a business must register with the Trade Office of the municipality in which the firm is situated. For that, you will need:

 

·         Valid ID or passport

·         Residence permit

·         Depending on the sector, a permit or authorisation

·         A Craft Card (Handwerkskarte) if you are setting up in business in the craft sector. It’ll be between 10 and 40 Euros for the registration fee.

 

The trade office will inform the following authorities, with whom you also have to be registered: Tax Office; Accident Insurance Fund; Chamber of Industry and Commerce or Chamber of Crafts; local court (trade register); Trade Supervisory Office (responsible for the health and safety of your employees and customers, etc).

 

Be responsible: check whether all of these bodies have actually received the information.

 

The Health Office (Gesundheitsamt)

 

Depending on which sector you are involved with, you might require a permit or a certificate of non-objection from the health office. For example, this would apply to businesses associated with catering and the sale of foodstuffs. In the case of start-ups in catering or childcare, the Health Office and the Trade Supervisory Office will also examine the standards of hygiene in your workplace.

 

Furthermore, you will need a Certificate of Good Conduct from the constabulary, and confirmation from the Chamber of Industry and Commerce that you have satisfactorily completed a programme on hygiene and the handling of food.

 

The Construction Office (Bauamt)

 

If you wish to use spaces/locations previously used for other purposes than your future operations room, you will need to apply for a ‘change in use’, available from the relevant Construction Office. The planning of rebuilding work and of new buildings for commercial purposes must also be coordinated in good time with the construction office.

 

The Trade Supervisory Office (Gewerbeaufsichtsamt)

 

Find out in good time before operations commence whether the rooms you plan to use meet legal requirements.

 

The Occupational Accident Insurance Fund (Berufsgenossenschaft)

 

The Berufsgenossenschaft (BG) is the statutory accident insurance fund for staff members and also - depending on the sector - for the self-employed. If you employ staff, you must insure them at the relevant BG. Depending on the sector, you may be required to insure yourself there as well. If not, you can insure yourself on a voluntary basis. Enquire at the Association of Occupational Accident Insurance Funds (Hauptverband Der Gewerblichen Berufsgenossenschaften – HVBG).

 

The Commercial Register (Handelsregister)

 

Unlike smaller businesses and companies organised as a GBR (Gesellschaft Burgerlichen Rechts), all companies must be enrolled in the commercial register at the local court (Amtsgericht). The commercial register is public and provides information about the company (name of company, name of owner, etc.)

 

The Chamber of Crafts (Handwerkskammer)

 

Being a member of the EU, you will benefit from the freedom to set up a business in the craft sector. The requirements for documentation of qualifications are based on EU law. Accordingly, you need to have been active for between three and six years as a self-employed person or a company director in the relevant occupation.

If you fail to present documentation of the required number of years, you can still register as a craftsman in Germany if you have obtained a qualification equivalent to the German master-craftsman certificate (Meisterprufung). You could demonstrate your skills by way of a diploma, examination certificate or other proof from your country of origin. If the foreign certificate lacks evidence of required skills and knowledge, you can obtain these in an adaptation course or an aptitude test. Occupational experience alone is not sufficient for craft occupations within the health sector.

 

How is day-to-day living in Germany?

 

 

Shopping and groceries

 

Germans like to shop. As with the UK, you might even say it's a national pastime. This makes finding anything you need relatively easy.

 

You can find a number of superstores in many city suburbs, and even in some city centres.  There are also the hypermarkets such as Real, Kaufland and Globus Handelshof, which offer a wide range of products including groceries, household goods, beverages, pet supplies, clothing, etc. These hypermarkets are housed within shopping centres and often coupled with a few other large specialty stores.

 

There are also the (in)famous German discount supermarkets, such as Aldi and Lidl, which, as many UK shoppers already know, specialise in groceries, textiles, toys, office supplies. All at ‘unbeatable’ prices, of course.

 

Opening times are consistent with the UK.

 

 

Healthcare

 

Germany has a reputation for having one of the best health care systems in the world, providing its residents with comprehensive health insurance coverage. Approximately 85% of the population are mandatory or voluntary members of the public health scheme, while the others usually have private health insurance. The health insurance reform of 2007 now requires everyone living in Germany to be insured for at least hospital and out-patient medical treatment.

 

You may choose to purchase private health insurance - instead of joining the government health plan - if your gross salary is more than 47,700 Euros per year. Self-employed persons, German civil servants and those persons working part-time and earning less than 400 Euros per month are also eligible.

 

You can also obtain a list of English-speaking doctors through the worldwide network of the International Association for Medical Assistance (IAMAT). IAMAT members receive a city-by-city directory of professionally qualified doctors who speak English.

 

There is no need to be concerned about the quality of dental care, either. It's comparable in just about every way with the care you get here in the UK. The Germans are very thorough and efficient.

 

Dental emergency services are available throughout the country. You'll find a list of the numbers to call at dentists' offices, pharmacies, hospitals, police and fire stations and in the daily newspapers.

 

Dental work can be covered by health insurance.

 

 

Social Security

 

The German social security system can be divided into 5 parts:

 

Ÿ  Pension insurance

Ÿ  Unemployment insurance

Ÿ  Health insurance

Ÿ  Care insurance

Ÿ  Companies accident insurance

 

The amount of health insurance contribution is dependent on the chosen health insurance company. Also, if the ceiling amounts are met, employees have the option of either being insured with a governmental health insurance company, a private health insurance company, or not being insured at all. If you are insured with a private company, the amount of contribution is dependent on your age, health and familial circumstance.

 

 

Crime

 

Violent crime is rare in Germany, although incidents may occur, especially in high risk areas in large cities, such as train station. Most incidents related to street crime involve unattended objects or pick-pocketing.

Banks of Germany

ABN AMRO Bank (Deutschland) AG, Theodor-Heuss-Allee 80 60486 Frankfurt am Main Tel: +49 69 26 90-00 www.abnamro.com Banco Santander, S. A., Eschersheimer Landstr. 25 - 27 60322 Frankfurt am Main Tel: +49 69 5 96 76-110 www.gruposantander.es Barclays Bank PLC, Bockenheimer Landstr. 38 - 40 60323 Frankfurt am Main Tel: 69 7161-00 www.barclaycard.de Bayerische Hypo-und Vereinsbank AG Am Tucherpark 16 80538 München Tel: +49 89 37 80 www.hypovereinsbank.de Citigroup Global Markets Deutschland AG & Co. KGaA, Frankfurter Welle Reuterweg 16 60323 Frankfurt am Main Tel: +49 69 13 66-0 http://www.citibank.de Commerzbank AG, Kaiserplatz 60311 Frankfurt am Main Tel: +49 69 1 36 20 www.commerzbank.de Deutsche Bank AG Theodor-Heuss-Allee 70 60486 FRANKFURT (for letters and postcards: 60262*) Tel.: +49 69 910-00 Fax: +49 69 910-34225 www.db.com Deutsche Postbank AG, Friedrich-Ebert-Allee 114 - 126 53113 Bonn Tel: +49 2 28 9 20-0 www.postbank.de Dresdner Bank AG, Jürgen-Ponto-Platz 1 60301 Frankfurt am Main Tel: +49 69 2 63-0 www.dresdner-bank.de HSBC Trinkaus & Burkhardt AG, Königsallee 21 - 23 40212 Düsseldorf Tel: +49 2 11 9 10-0 www.hsbctrinkaus.de Morgan Stanley Bank AG, Junghofstr. 13 - 15 60311 Frankfurt am Main Tel: +49 69 21 66-0 www.morganstanley.com Westdeutsche Landesbank WestLB AG Herzogstraße 15 40217 Düsseldorf Tel.: +49 211 826-01 Fax: +49 211 826-6119 Email: info@westlb.de www.westlb.com