Foreign Businesses in Germany

Foreign Businesses in Germany

In principle, business activities in Germany are free from regulations restricting day-to-day business. German law generally makes no distinction between Germans and foreign nationals regarding investments or the establishment of companies.

Intellectual property is well protected by patent laws which extend the same conditions enjoyed by Germans to foreign entrepreneurs. Where necessary, investor rights can be enforced by Germany’s efficient judicial system.

Reliable laws enable companies to plan their investments effectively and licenses granted by the authorities provide a secure base for breaking ground on a construction project or operating a plant.

Foreign Trade and Payments Act

Germany has an open and welcoming attitude towards foreign direct investment (FDI). The legal framework for FDI in Germany favors the principle of freedom of foreign trade and payment transactions as laid down in the Foreign Trade and Payments Act (Außenwirtschaftsgesetz) and the Foreign Trade and Payments Ordinance (Außenwirtschaftsverordnung).

The Federal Ministry for Economic Affairs and Energy may however review acquisitions of at least 25 percent of the voting rights of a German domestic company. Generally the cross-sector investment review procedure is applicable to acquisitions by non-EU/EFTA based buyers. It applies in principle to all sectors regardless of the size of the companies involved in the acquisition. Subject of the review is whether the acquisition poses a threat to the public order or security of Germany. The sector-specific investment review procedure applies to acquisitions of companies operating in sensitive security areas (e.g. certain defense and IT security activities) by any foreign buyers. In this case is examined whether German essential security interests are endangered by the acquisition.

Under both procedures restrictions and prohibitions are very seldom imposed in practice. Classic greenfield investments, where a new company is established, are not affected by the review. The scope of the review procedure is limited to acquisitions of domestic companies as well as substituting transactions, such as asset deals involving all significant assets of domestic companies.

Import Regulations

Importers in Germany need neither an import permit nor an import control declaration. This applies to both residents, meaning natural persons residing in Germany as well as legal entities or partnerships with a registered office or management headquarters in the territory of the Federal Republic of Germany.

On certain goods import duties apply, which over the past years have been constantly reduced. Some goods, such as agricultural products, food, pharmaceuticals, chemicals, and goods of strategic relevance are subject to certain import restrictions. In such cases import licenses and surveillance documents may need to be obtained before importing to Germany.

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Christina Schön Christina Schön | © GTAI/ Illing & Vossbeck Fotografie

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Udo Sellhast Udo Sellhast | © GTAI

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