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FDI

FDI Projects & Stocks

Germany counts among the world’s leading foreign direct investment (FDI) destination countries.

Germany is one of the world's most attractive business and investment locations. Within the European Union, the country enjoys a reputation as the preferred business destination for international investors.

FDI Data

Germany ranks among the top ten in the world as a recipient of foreign direct investment (FDI), according to the United Nations Conference on Trade and Development (UNCTAD).

European stocks at the top

According to official Bundesbank (“German Central Bank”) statistics for 2019, around sixty percent (or EUR 326 billion) of all FDI stocks in Germany originate from within the European Union, with a further nine per cent stemming from the remaining European non-EU countries. Investments from outside the EU continue to grow. North America accounts for 19 percent of FDI stock, while Asia holds an eleven percent share. Especially Asian countries increased their FDI stocks in Germany in recent years. Germany is the world’s largest recipient of new Chinese FDI projects.

Ongoing interest in greenfield investments

Between 2015 and 2020, fDi Markets recorded more than 7,200 investment projects in Germany by some 5,700 foreign companies. In 2020  more than 1,000 projects were noted down, making it a slightly weaker year due to the pandemic. However Germany is still placed third worldwide in terms of FDI projects attracted. FDI results are based on greenfield project announcements (including expansions and joint ventures) collected in the Financial Times Group's fDi Markets database.

The most important countries as sources for new investment projects are the USA (19 percent of all investment projects since 2015), Switzerland (eleven percent) as well as the UK (nine percent) and China (six percent). The ICT & software industry, and business & financial services are leading sectors in attracting new projects. The industrial machinery & equipment, textiles, consumer goods, and chemical industries are likewise attractive foreign investment sectors in Germany.

Most new projects open sales and marketing & support offices. One in seven investment projects is a manufacturing site or R&D-facility – making Germany a very important business location.

FDI Reputation

Want to know what makes Germany so attractive? Renowned FDI studies provide the answers.

First choice in Europe

A recent study (2021) conducted by the American Chamber of Commerce highlights the positive regard in which the German business environment is held by US companies. Invited to indicate how attractive the German investment environment is, 63 percent of the participating American companies replied with “very good” or “good”. A further 74 percent want to either expand or maintain their current activities in Germany over the next three to four years – given the difficult, pandemic-related situation these are promising figures.

Kearney’s “The FDI Confidence Index” confirms Germany's reputation as the most attractive business location in continental Europe. Similar positive statements were issued by American and Chinese CEOs in PwC’s “24th Global CEO Survey”. 

Mergers and Acquisitions (M&A)

In most cases, foreign investors can acquire stakes in German companies without restriction. The Federal Ministry for Economic Affairs and Climate Action (BMWK) may however review and, where necessary, prohibit acquisitions of German domestic companies.

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.

The subject of the cross-sectoral investment review is whether the acquisition is likely to affect the security or public order of Germany, another member state of the EU or specific projects/programs of EU interest. Any acquisition of 25 percent or more of the voting rights of a company located in Germany by investors based outside the EU or the EFTA region can be subject to such review. 

  • If the domestic target company in particular operates critical infrastructure or provides other specific security-relevant services related to the operation of such infrastructure, BMWi can review acquisitions of 10 percent or more of the voting rights. 
  • For acquisitions of domestic companies operating within the field of specific emerging technologies - for example semiconductors, AI, 3D printing or quantum technologies -  a review threshold of 20 percent or more of the voting rights applies.

Investments falling under one of the two above-mentioned groups with a review threshold of 10 or 20 percent of the voting rights must be reported to the BMWK.

Under the sector-specific investment review, special rules apply to the acquisition of domestic companies that operate in sensitive security areas (e.g. manufacturers and developers of weapons and other military key technologies). Under these rules, the BMWK can review whether an acquisition of 10 percent or more of the voting rights of a domestic company by any foreign buyer poses a threat to German essential security interests. These acquisitions are also subject to a notification obligation.

At the European level the FDI Screening Regulation establishes an EU-wide framework in which the European Commission and the Member States can coordinate their actions on foreign investments. The main purpose  is to help identifying and addressing security or public order risks that affect at least two Member States or the EU as a whole by establishing a cooperation mechanism between the Member States and the European Commission. National screening machanisms remain the exclusive responsibility of the Member States.

For further information on investment reviews in Germany please refer to the Federal Ministry for Economic Affairs and Climate Action.


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