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Germany - Market Entry & Business Opportunities

July 17, 2023 | Corporate & Commercial

Germany is considered as Europe’s best performing and most stable economy which is led by rapidly growing small and medium-sized enterprises and has dynamic trade relationships with other countries in Europe and rest of the world. The Country is known for its technical advancements and offers numerous business opportunities across the sectors for domestic and international investors.

Germany is a European country with its capital in Berlin. The official language is German, and the population is estimated to be around 83 million. The majority of the population identifies as ethnic Germans, but there are also significant minority groups and immigrants from various backgrounds. Germany covers an area of approximately 357,022 sq. km and uses the Euro as its currency.

Economic Overview


Germany, the largest economy in Europe and the fourth largest in the world, is expected to experience a rebound in GDP growth. After a challenging period due to energy price shocks, the country's industrial sector has demonstrated resilience, with strong order books and equipment investments driving manufacturing and exports. GDP growth is forecasted to accelerate from 0.2% in 2023 to 1.4% in 2024. Inflation, which peaked at 11.6% in October 2022, has been gradually decelerating and is projected to reach 6.8% in 2023. The government deficit is expected to decrease from 2.6% of GDP in 2022 to 2.3% in 2023 and further to 1.2% in 2024. Government debt is also forecasted to decline from 66.3% of GDP in 2022 to 65.2% in 2023 and 64.1% in 2024. These positive indicators reflect the improving economic outlook and stability in Germany.

Market Overview


Germany has the fourth-largest economy globally and plays a crucial role in the European Union. Its market-based economy is supported by government regulations and social welfare programs. Germany's strong consumer market and trade events contribute to its global influence. Despite the impact of COVID-19, Germany's fiscal strength, stimulus packages, and flexible work schemes helped maintain low unemployment rates. The services sector rebounded in 2021, resulting in 2.8% GDP growth, but economic forecasts for 2022 have been revised downwards due to geopolitical factors. Germany actively participates in the EU's recovery through the Next Generation EU program, focusing on digital and green transitions and resilience. Financial resources have been allocated for initiatives such as electric vehicle adoption, energy efficiency, childcare services, and digitalisation.

Bilateral Relations between India-Germany


  • Several institutionalised arrangements exist between Indian and Germany on bilateral and global issues including Foreign Office Consultations, High Technology Partnership Group, High Defence Committee, Indo-German Energy Forum, Indo-German Environment Forum and Joint Working Groups in sectors like skill development, automotive, agriculture, water and waste management.
  • India and Germany agree to work together with focus on Artificial Intelligence Start-ups as well as AI research and application in sustainability and healthcare.
  • In April 2021- the German Federal Cabinet approved aligning of the amended framework agreement of the International Solar Alliance.
  • The two countries cooperate on the issue of UNSC expansion within the framework of G-4 and consult each other in G-20 on global issues like climate change.

Taxation and Subsidies offered by Germany


Taxes in Germany are imposed by different levels of government, including the federal government (Bundesregierung), federal states (Bundesländer), and municipalities (Gemeinden). The responsibility for tax administration is divided between two main authorities: the Federal Central Tax Office (Bundeszentralamt für Steuern) and around 650 regional tax offices (Finanzämter).

  • Income Tax: Germany has a progressive income tax system with rates ranging from 14% to 45% based on taxable income. Most individuals have taxes deducted directly from their salary, but those with multiple professions or self-employment must file annual tax returns.
  • Withholding Tax: Withholding tax refers to income tax and other contributions deducted by employers from employees' salaries. It includes income tax, national insurance contributions, and other taxes on benefits provided by the employer.
  • Solidarity Surcharge: The solidarity surcharge is a supplementary tax of 5.5% levied on income tax, capital gains, and corporation taxes. It was introduced to support the reunification of Germany and has been eliminated for 90% of taxpayers as of January 2021.
  • Trade Tax: Trade tax, or Gewerbesteuer, is a local tax imposed on businesses engaged in commercial activities. It varies based on the location and is calculated on the business's taxable income. Each municipality sets its own rate within a federal base rate of 3.5%.
  • Annual Tax Return: Individuals have the option to submit a tax declaration at the end of the fiscal year to ensure correct tax payment. This allows for potential refunds or additional tax payments based on income, deductions, and previous tax payments.

Financing Business in Germany


Financing a business in Germany can be done through various sources, depending on the specific needs and circumstances of the company.

  • Bank loans are a common financing option, with various banks offering loans for different business needs.
  • Government support programs provide grants, loans, and guarantees to eligible businesses.
  • Equity financing involves selling ownership stakes to investors, such as private equity firms or venture capitalists.
  • Crowdfunding platforms allow businesses to raise funds from a large number of individuals.
  • Trade credit allows businesses to defer payment for goods and services received, improving cash flow.
  • Business grants and subsidies, both regional and national, are available for specific industries or initiatives.
  • Business angels and networks provide financial support, mentorship, and industry connections.

Top 10 Companies in Germany – 2022

Rank    Company    Industry    Revenue in 2022 (USD)
1 Volkswagen    Automobile Manufacturing $ 306.89 B
2 Uniper    Electricity    $ 247.64 B
3 Mercedes-Benz Automobile Manufacturing $ 157.96 B
4 BMW    Automobile Manufacturing $ 155.37 B
5 Allianz    Insurance    $ 124.90 B
6 E.On Utilities    $ 122.05 B
7 Deutsche Telekom Utilities    $ 120.21 B
8 Deutsche Post Courier    $ 99.41 B
9 BASF    Chemicals    $ 88.06 B
10 Siemens Engineering    $ 77.25 B


Most Popular E-Commerce Companies In Germany – 2022

RANK    COMPANY    Headquarter
1 Lidl    Germany
2 Amazon    USA
3 Obi USA
4 Mediamarkt    Germany
5 Ebay    USA


Top 5 Start-Ups In Germany – 2022

RANK    COMPANY    INDUSTRY    FOUNDED IN
1 Faircado    Information Technology 2022
2 Holidu    Travel 2014
3 Getquin    Social Media 2020
4 Mondu    Financial Services 2021
5 Ostrom    Environment    2021


Business Clusters in Germany


Germany is known for its strong and diverse business clusters that contribute significantly to its economy. These clusters are regional concentrations of interconnected companies, suppliers, service providers, and research institutions within a particular industry or sector.

  • Automotive Cluster: Strong presence of major automotive companies in Stuttgart and Wolfsburg.
  • Industrial Machinery and Engineering Cluster: Concentrated in Bavaria and Baden-Württemberg, with hubs in Munich, Stuttgart, and Nuremberg.
  • ICT Cluster: Berlin as a significant hub, along with Munich, Hamburg, and Frankfurt.
  • Life Sciences and Biotechnology Cluster: Frankfurt and Munich, along with the Rhine-Main region, are prominent.
  • Renewable Energy Cluster: Strong concentration in northern regions like Schleswig-Holstein and Lower Saxony.
  • Aerospace and Aviation Cluster: Hamburg as a key centre, with clusters in Munich and Bremen.
  • Chemical and Pharmaceutical Cluster: Rhine-Ruhr region, Leverkusen, Ludwigshafen, and Mannheim are prominent.
  • Financial Services Cluster: Frankfurt as the financial hub with major banks and insurance companies.
  • Logistics and Transportation Cluster: Hamburg, Frankfurt, Duisburg, and Munich are significant in logistics.
  • Food and Beverage Cluster: Bavaria, Hamburg, Cologne, and Stuttgart have thriving clusters.

How to Set up a Business in Germany?


Anyone can establish a business in Germany irrespective of the nationality. There are no barriers for the foreign investors to establish a business in Germany. But the local trade office registration requires that the local representative of the business should be in Germany. This could be done by setting up a Subsidiary (a new legal entity) or to open a Branch Office (not a new entity but an extension of head office). Following are the key steps that a foreign national need to go through while establishing a subsidiary / new entity in Germany:

  • Choose the right legal entity 'AG' or 'GmBH'
  • Check for name availability & define the exact object of business
  • Draft Articles of Association & submit to notary with other requisite documents
  • Open a bank account & appoint a tax advisor to complete tax registration
  • Register with the Finanzamt

 To know more about our services and how we can help you in Germany – CLICK HERE

Best Locations to Set up Business in Germany


Germany offers numerous attractive locations for setting up a business. Here are some of the best locations known for their business-friendly environments, infrastructure, and economic opportunities:

  • Berlin: Vibrant start-up scene, international business environment, and supportive ecosystem for innovation.
  • Munich: Strong economy, particularly in automotive, technology, and finance sectors, skilled workforce, and high quality of life.
  • Frankfurt: Major financial centre, home to the European Central Bank, well-developed financial and banking sector.
  • Hamburg: Key maritime and logistics hub, diverse economy, strong in maritime trade, aerospace, media, and renewable energy.
  • Stuttgart: Automotive and engineering industries, highly skilled workforce, focus on technological innovation.
  • Düsseldorf: Economic and business hub, strong presence in fashion, advertising, telecommunications, and financial services.
  • Cologne: Media, creative industries, and chemical manufacturing, central location, dynamic business environment.
  • Leipzig: Thriving in logistics, e-commerce, and renewable energy, affordable office space, growing start-up ecosystem.

Visa and Immigration


There are typically three types of residence titles in Germany, which vary based on the duration of stay and the nature of the business activity.

  • National Visa - The Germany National Visa allows stays over 90 days for purposes like work, study, and family reunification. It requires a job offer or proof of qualifications. Additional visa types are available for research, language courses, internships, medical treatment, or self-employment. Application involves submitting required documents, and upon arrival, a residence permit must be obtained for legal residence and intended activities in Germany.
  • Business Visa - The Business Visa allows short-term stays in Germany and the Schengen Area for up to 90 days within a 180-day period. It is for engaging in business activities like meetings, conferences, negotiations, and exploring opportunities. For longer stays or working in Germany, a National Visa or specific visa type may be required.
  • Settlement Permit - The Settlement Permit allows indefinite residence and work in Germany without time restrictions. Eligibility depends on factors like nationality, duration of residence, employment, language proficiency, and financial stability. It is often obtained after holding a temporary residence permit for several years. Benefits include freedom to work, access to social security, and visa-free travel in the Schengen Area. Integration into German society may be required.
Germany is among the world’s largest and most stable trading economies, offering a secure, highly developed political and economic framework. Its strong legal protections enable investors to quickly enforce their rights and protect their industrial and intellectual property. There are a variety of options for foreign nationals to enter the German market including setting up their own company or collaborating with a local partner. Which strategy would be suitable for you would depend upon the on the specific sector and business objectives.

Over the past two decades, India Law Offices has built a strong foothold worldwide and have forged strategic alliances with some of the largest law firms that enable us to serve our clients from around the world. In Germany, we closely work with Schulte Rechtsanwälte, a reputable law firm based in Frankfurt, Germany that specializes in various key areas of business law, including labour law, corporate and commercial law, mergers and acquisitions (M&A), intellectual property, and antitrust law.

If you are a German national or an entrepreneur seeking legal assistance in India or an Indian planning to expand your business to Germany, our firm can provide the necessary guidance and support you require.


To know more about the Germany market, request a Free Detailed Germany Market Entry Report by submitting a query below.

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