Christian Kiock, UK Regional Committee member, British Chambers of Commerce in Germany presented Germany as part of Germanic Europe to an audience of exporters in Cambridgeshire.

1. 26/11/2014
1
Export Opportunities: Think Germanic Europe
Cambridge, Wednesday 19th November
I. Germany – a brief overview
II. 10 Reasons to do Business in Germany
III. Establishing a Business and Company Taxation
IV. What else?
2

2. 26/11/2014
2
About Germany
• Approx. 82 million inhabitants
• Europe's largest economy and domestic market and
second most populous nation (after Russia)
• Germany is one of the largest exporters
• Germany is also one of the largest importers of
goods in the world (Imports: > GBP 800 billion
(2012))
• German economy was relatively resilient in recent
years >3% growth since 2009.
• Main imported commodities:
• Machinery
• Data processing equipment
• Vehicles
• Chemicals
• Metals
• Electric equipment
• Pharmaceuticals
• Foodstuffs/agricultural products
About Germany
• Germany has strong trading links with the UK
• One of the most important export markets for UK (annual sales >GBP30bn in goods and
services)
• Central location: easy access to the established markets in western Europe and
emerging markets in central and eastern Europe
• Regionalised markets
• Germany is highly regulated (e.g. environmental regulation, legal issues and tax)
• The German market is particularly supportive of SMEs - approximately 99% of all
German companies are SMEs.
• “Germany is like the John Lewis of markets. It's difficult to get in but once you are in you
are very secure.”

3. 26/11/2014
3
I. Germany – a brief overview
II. 10 Reasons to do Business in Germany
III. Establishing a Business and Company Taxation
IV. What else?
5
10 Reasons to do Business in Germany
1. First Class Infrastructure
2. Inviting Incentive
3. Competitive Tax Conditions
4. Secure Investment Framework
5. Quality of Life
6. Leading Economy
7. Global Player
8. High Productivity
9. Excellent Workforce
10. Innovative Power
6

4. 26/11/2014
4
II. First Class Infrastructure
Located at the heart of Europe,
Germany is Europe's number one
logistics market. A sophisticated
energy and communications
infrastructure and first-class
transportation networks ensure
on-time delivery and short roads
to success.
7
II. Inviting Incentive
Germany provides attractive
incentives to all investors. A
comprehensive range of programs
support the broad spectrum of
business activities at all stages of
the investment process. Support
ranges from cash incentives for the
reimbursement of direct
investment costs to incentives for
labour and R&D.
8

5. 26/11/2014
5
II. Competitive Tax Conditions
Germany has significantly reduced
its corporate tax levels. A far-reaching
reform of company
taxation is helping companies
invest, and secure new business.
The Federal Government’s raft of
reforms to improve the general tax
framework and keep indirect
labour costs down are opening
doors of opportunity to ever more
investors.
9
II. Secure Investment Framework
Highly developed economic and
political frameworks provide the
necessary security for your
business investment. Our judiciary
and civil service institutions are
professionally regulated to ensure
consistently excellent service.
Contractual agreements are secure
and intellectual property is strictly
protected.
10

6. 26/11/2014
6
II. Quality of Life
Germany is a modern, tolerant,
and cosmopolitan society with an
excellent standard of living.
Superior health and education
provision, endless opportunities
for sports and recreation in our
beautiful landscape, and a vibrant
cultural scene are just some of the
reasons why more than seven
million foreigners have made their
homes in Germany.
11
II. Leading Economy
Germany is Europe's economic
engine. Investors profit from the
economic performance of the
world's fourth largest economy.
We also offer a large domestic
market and easy access to growing
markets in the enlarged European
Union.
12

7. 26/11/2014
7
II. Global Player
Germany is the world’s number
three exporter, neck and neck with
China and the US after six years at
the top spot. And with EUR 469
billion FDI, we also proved to be an
investment magnet and one of the
top regions for foreign investors.
13
II. High Productivity
One of the highest productivity
rates in the world, German quality,
and steadily decreasing unit labor
costs are the decisive factors for
our competitiveness. A series of
social and market reforms have
further contributed to Germany's
continued economic growth to
make it one of Europe’s most cost-effective
production locations.
14

8. 26/11/2014
8
II. Excellent Workforce
Our world class education system
ensures the highest standards. 81
percent of the German population
have been trained to university
entrance level or possess a
recognized vocational qualification
– above the OECD average of 67
percent. An investor friendly
social-market economy promotes
stable labor relations.
15
II. Innovative Power
Germany is Europe's number 1
location for research. German R&D
is backed by billions of euros in
annual federal funds, helping to
make Germany the world's leader
in innovation. It's this commitment
which also makes us Europe's
leading patent applicant and the
leading global force in high-tech
solutions.
16

9. 26/11/2014
9
I. Germany – a brief overview
II. 10 Reasons to do Business in Germany
III. Establishing a Business and Company Taxation
IV. What else?
17
III. Business Establishment
For British companies there are different ways to establish a German market presence.
UK Company
18

10. 26/11/2014
10
III. Business Establishment
The German private limited liability company (GmbH) is the most widely used legal
form for corporations in Germany.
GmbH:
• Is suitable for every business object except listing on the stock
exchange.
• Combines high flexibility with relatively few obligations.
• Well-known company form with good reputation not only within
Germany.
• Requires a minimum share capital of EUR 25,000 (cash or kind).
• The liability of the shareholders is limited to their respective
contribution.
19
III. Business Establishment
The GmbH has two mandatory bodies: the managing director(s) and the shareholders’
meeting.
GmbH
Managing Director (s) Binding Instructions Shareholders´meeting
• The managing director(s) (Geschäftsführer) represent(s) and manage(s) the
GmbH.
• The shareholders’ general meeting (Gesellschafterversammlung) is sovereign
and can issue directions binding the management.
• There are no requirements regarding nationality or domicile of the managing
director or the shareholders.
• German business address as well as a local representative are required.
20

11. 26/11/2014
11
III. Business Establishment
The establishment procedure of a GmbH is straightforward with well-defined steps.
Drafting of
articles of
association
(AoA)
Notarization
by a German
Notary
Opening a
bank
account &
payment of
share capital
Entry in
commercial
register
Trade office
notification
• The timeframe for a GmbH establishment is ideally 1-2 weeks.
• The statutory regulated establishment costs for a standard GmbH are around
EUR 800.
21
III. Business Establishment
The UG (Unternehmergesellschaft -haftungsbeschränkt) also known as Mini-GmbH is a
special form and a starter version of the GmbH.
UG (haftungsbeschrängt)
• The UG is largely subject to the same provisions as the GmbH
(establishment procedure, mandatory bodies, limited liability etc.).
Main differences include:
• For the establishment of an UG a minimum share capital of only
EUR 1 is sufficient.
• The UG has to retain a quarter of its annual profit until it has
accumulated the minimum share capital of an ordinary GmbH (EUR
25.000).
• The accumulated EUR 25.000 can be converted into share capital
and the UG can change its corporate affix from “UG” to “GmbH”.
From now on profit can be fully distributed, if desired.
22

12. 26/11/2014
12
III. Company Taxation
Germany does not have a consistent nationwide tax rate for the corporate income
taxation – it depends on the locally varying trade tax.
Average Corporate Tax Burden (2013, in %)
1National German average. Lower overall tax rates in certain areas are possible, e.g. only 22.83% in certain
municipalities.2Top corporate income taxation rate incl. local taxes; lower starting rates or other special tax rates
available. 3Based on standard rate of IRAP.Source: Federal Ministry of Finance (BMF)
23
III. Company Taxation
Income taxation of corporations consists of three taxation components.
15.825 %
Starts at 7 %
15 % of the taxable income
0.825 % all over Germany
(5.5% of the corporate income tax rate of 15%)
1. Corporate Income Tax
(Körperschaftssteuer)
2. Solidarity Surcharge
(Solidaritätszuschlag)
3. Trade Tax (Gewerbesteuer)
• Trade tax rates are individually determined by each municipality.
• Trade tax rates range starts with 7.0 % and the average trade tax rate is around 14 % of the
taxable income
24

13. 26/11/2014
13
I. Germany – a brief overview
II. 10 Reasons to do Business in Germany
III. Establishing a Business and Company Taxation
IV. What else?
25
What else?
• High level of English proficiency
• Many companies already use English as their “official internal language”
• High adoption rate of modern (social) media and devices (smartphones, mobile
computing, online retailing etc.)
• Similar cultural values
• Short distances from the UK
• England/Great Britain is very popular in Germany – just don’t mention the war…
• A (work) ethic that is (largely) based on diligence, trust and loyalty
• German business partners (customers, suppliers, employees etc.) will put great
value on reliability

14. 26/11/2014
14
What else?
• You will almost always have to meet the German standard or the approval of a German
regulation
• This is both a barrier and a bonus – once you are ‘approved’, doing business in Germany
becomes a smooth(er) process
• When visiting the market, expect short and productive business meetings, and be
prepared to invest in German speakers or literature
• Germans will let you know relatively quickly if they don’t think your product or service is
of interest or not
• Although this may appear to be rude, it saves time and effort and doesn’t leave false
hope
• They may want to negotiate terms immediately or at east very early on. You need to be
prepared and ready for this eventuality and make the effort to bridge the language
divide.