Starting a Business in Germany
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Why Start A Business In Germany?
England has a long, entwined history with Germany. Football is just microcosm of it all. Individually, we adore them. Germans are polite, pensive and sophisticated. Collectively, however, our attitude hasn't been so amiable. Germans are the punchline to our jokes and our sporting rivals. The one attribute no one can joke with, though, is Germany's socioeconomic physique. And to use a turn-of-phrase ironically, the question should be: why not invest in Germany?
It is the epitome of a heterogeneous nation: linguistically, racially and economically. A stew of ethnicity. It is nearly two decades since the fall of the Berlin Wall and the Germans have been laying cement, bashing metal, swinging cranes, spending money and contemporising ever since. They have been building the future and burying the past. The convalescence and reunification program took no time at all and is undoubtedly one of the most impressive in modern history.
Now Germany stands on the frontline of economic prowess and nothing stands in the way of an ambitious entrepreneur with a little capital and a good idea. Fundamentally, it is the economic engine of mainland Europe and over three-quarters of the population are trained to a university level. In Germany, ineptness and incompetence are as irregular as strong verbs, and brands are as distinguishable as the accent: Aldi, Braun, Haribo, Hugo Boss, Jagermeister, Knorr, Nivea, Persil, Porsche, Puma, Volkswagen.
Deutschland emits electricity, charging, brightening and powering everything on its economic circuit board. It also accommodates the largest population, market and economy in the EU, and the government knows a good thing when it has it. They are prepared to provide you with a financial thrust for establishing in some of the smaller areas of the country, and the odd incentive in thriving cities like Hamburg, Munich and Frankfurt. Either way, Germany still seems like an all-or-everything deal; and unlike the football, we can't lose.
So, if you are ready to follow in Germany's footsteps and build for the future, then read on to find out exactly what makes it an entrepreneurial EU-topia.
What is the currency and exchange rate?
Germany, like its fellow EU members, uses the Euro.
What is the population?
Germany has the largest population in the EU, currently standing at 81.63 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.
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 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 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.
The German economy is very export-happy, with exports accounting for more than one-third of national activity. Germany's main exports are:
- Consumer electronics
And their primary imports, similarly, are:
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.
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.
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 cut. 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.
In the first instance, it is very 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.
Organisations that can assist with Starting a Business
PEO Worldwide is an international PEO offering employer of record, payroll, employee benefits management, HR and compliance services throughout the world.
When expanding your business to Germany, donít forget to protect your brand. We provide Trademark Registration Services in Germany and in the entire European Union.
Simplified Global Payroll Managing payroll in multiple countries is complicated with different systems, deadlines, and languages in each country, lack of reporting, and constantly changing laws and regulations. Trying to manage global payroll via fax and email with excel spreadsheets leads to data security issues, fines, and penalties for non-compliance. Blue Marble has solved global payroll challenges with cloud-based technology, customized aggregated monthly reporting, and a hybrid service model in 150+ countries around the world.