Germany: Investing

FDI in Figures

Germany is a very attractive country in terms of foreign direct investment. According to UNCTAD, the country is world's fifth largest recipient of FDI. In the recent years, it has experienced a rapid growth of FDI flows from Asia, especially from China and India.

Among the country's strengths are its very high and powerful industrial network, a highly skilled workforce with a good command of English and a location in the heart of Europe. Its main weakness is a high tax rate (for both individuals and businesses).

Foreign Direct Investment	2008	2009	2010
FDI Inward Flow (million USD)	24,435	37,627	46,134
FDI Stock (million USD)	666,037	676,715	674,217
Performance Index*, Ranking on 141 Economies	127	113	-
Potential Index**, Ranking on 141 Economies	3	-	-
Number of Greenfield Investments***	724	470	-
FDI Inwards (in % of GFCF****)	3.5	1.4	-
FDI Stock (in % of GDP)	18.2	21.0	-

Source: UNCTAD - Last Available Data.

Note: * The UNCTAD Inward FDI Performance Index is Based on a Ratio of the Country's Share in Global FDI Inflows and its Share in Global GDP. ** The UNCTAD Inward FDI Potential Index is Based on 12 Economic and Structural Variables Such as GDP, Foreign Trade, FDI, Infrastructures, Energy Use, R&D, Education, Country Risk. *** Green Field Investments Are a Form of Foreign Direct Investment Where a Parent Company Starts a New Venture in a Foreign Country By Constructing New Operational Facilities From the Ground Up. **** Gross Fixed Capital Formation (GFCF) Measures the Value of Additions to Fixed Assets Purchased By Business, Government and Households Less Disposals of Fixed Assets Sold Off or Scrapped.

FDI Inflows By Countries and Industry

Main Investing Countries	2009, in %
United States	29.0
United Kingdom	9.0
France	6.0

Main Invested Sectors	2009, in %
ICT and software	19.0
Business and financial services	16.0
Industrial machinery and equipment	14.0
Chemical, plastic and paper products	8.0
Electronic products and semi-conductors	7.0
Transport, storage and logistics	6.0

Source: Germany Trade & Invest - Last Available Data.

Form of Company Preferred By Foreign Investors: GmbH
Form of Establishment Preferred By Foreign Investors: Distributors, commercial agents.
Main Foreign Companies: Ford , General Motors, Exxon Mobil, Sony, Toshiba, Total.
Sources of Statistics: German statistics office

Why You Should Choose to Invest in Germany

Strong Points: Germany's strong points are:
- A strategic location at the center of Europe;
- The biggest population of the European Union;
- Advanced technology and expertise;
- A highly qualified work force;
- Competitive taxation.
Weak Points: Public finances are stucturally highly in deficit. The eastern part of the country is struggling to catch up in many fields. The ageing population weighs heavily on growth. The unemployment rate poses a real challenge for the development of the country and its future influence.
Government Measures to Motivate or Restrict FDI: The Germany government is implementing mesures aimed at encouraging investments in the country:

- Financing by the European Union and/or by German federal entities;
- Aid aimed especially at the initial investment phase but also at the operational phase of the project.

Protection of Foreign Investment

Bilateral Investment Conventions Signed By Germany: Germany has signed many bilateral agreements.
To see the list of countries, click here.
To see the conventions, click here.
International Controversies Registered By UNCTAD: Germany is in a controversy situation with India because of the Ashok Sancheti, with the Czech Republic in the of the forest and with Ukraine for an oil tanker litigation.
Organizations Offering Their Assistance in Case of Disagreement: ICCWBO , International court of arbitration, International chamber of commerce
ICSID , International Center for settlement of Investment Disputes
Member of the Multilateral Investment Guarantee Agency: Germany is a signatory to the Convention of the MIGA.

Country Comparison For the Protection of Investors

	Germany	OECD	United States
Index of Transaction Transparency*	5.0	6.0	7.0
Index of Manager’s Responsibility**	5.0	5.2	9.0
Index of Shareholders’ Power***	5.0	6.8	9.0
Index of Investor Protection****	5.0	6.0	8.3

Source: Doing Business - Last Available Data.

Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action. **** The Greater the Index, the Higher the Level of Investor Protection.

Procedures Relative to Foreign Investment

Freedom of Establishment: Yes. The German government and industry actively encourage foreign investment in Germany, and German laws provides foreign investors national treatment.
Acquisition of Holdings: Foreign investors may have a majority holding in the capital of a local company. The Foreign Economic Law contains restrictions on private direct investment for reasons of foreign policy, foreign exchange, national security, public order. Restrictions also concern armaments and cryptographic equipment.
Obligation to Declare: The agency for the promotion of foreign investment in the country gives information about the authorizations necessary for setting up.
Competent Organization For the Declaration: Federal Office of Economics and Export Control
Requests For Specific Authorizations: Investments have to be governed by the policies and the procedures which are specific to the sector. For more information refer to the BAFA.

Office Real Estate and Land Ownership

Possible Temporary Solutions: The property ownership regulation first and foremost comes from State responsibility.
The Possibility of Buying Land and Industrial and Commercial Buildings: Yes
Risk of Expropriation: According to German law, for public purposes only and in a non-discriminatory manner, private property can be expropriated. The process must be transparent, and victims must receive prompt, adequate and effective compensation.

Investment Aid

Forms of Aid: Foreign investors should contact the Invest in Germany agency and the Federal Commissioner for Foreign Investment in Germany for further information about aid for setting up in Germany.
Privileged Domains: Subsidies, low interest rate loans, financial incentives and other financial measures are financed by the European Union, the Federal Government and various Länders (administrative units). For more information, refer to the German investment promotion agency.
Privileged Geographical Zones: The most important incentives concern operations carried out in the 5 new Länder in the East of the country. Companies can benefit from subsidies for equipment, structures for research and development (see with the Ministry of the Economy and Technology). They can also obtain preferential loans and guarantees, for example when they create autonomous structures in these Länder or when they acquire a holding in a company established in these same Länder.
Free Zones: The eastern part of Germany. There are five free trade zones established under EU law: Bremerhaven, Cuxhaven, Deggendorf, Duisburg and Hamburg.

Investment Opportunities

The Key Sectors of the National Economy: Consumer goods, since the number of inhabitants is the highest in Europe. Subcontracted goods, as Germany is the machine tool champion. High technology products and the renewable energies.
High Potential Sectors: Services to consumers, high-tech, multimedia and electronic sectors.
Privatization Programs: The railway, water supply, stakes in sports and postal services.
Tenders, Projects and Public Procurement: Bundesausschreibungsblatt, Tenders official body (in German)
Tenders Info, Tenders in Germany
Ted - Tenders Electronic daily, Business opportunities in EU 27
DgMarket, Tenders Worldwide

Sectors Where Investment Opportunities Are Fewer

Monopolistic Sectors: Education
Sectors in Decline: Wood, steel and iron industries.

Finding Assistance For Further Information

Investment Aid Agency: http://www.gtai.de/GTAI/Navigation/EN/invest.html
">Invest in Germany
Doing Business Guides: The Lexmundi « Doing Business » guide to Germany
The Deloitte "International Tax and Business Guide" on Germany
Germany Commercial Guide 2010 - Buy USA

Any Comments About This Content? Report It to Us.

Learn more about Investing in Germany on Globaltrade.net, the Directory for International Trade Service Providers.

TERMS & CONDITIONS | SITEMAP | FAQ | VIDEOS | CONTACT