Business with Germany

Germany is the strongest economy in Europe and one of the most attractive business locations worldwide. Here you find more information.

General Information

The Federal Republic of Germany is a state in Central Europe. It stretches over 357,121.41km² and has borders with nine neighboring countries:
• Denmark
• Poland
• Czech Republic
• Austria
• Switzerland
• France
• Luxembourg
• Belgium
• Netherlands
The capital and headquarters of government is Berlin. Six ministries still remain in the former capital Bonn (until 1999).
In 2016, Germany had approximately 82.5 million inhabitants. This equals a population density of 231 inhabitants per km². About 3.6 million people live in the capital Berlin.
About 51% of the population are female. According to estimations by the Federal Statistical Office in 2016, 22.5% of the population had immigrant backgrounds. Migrants mainly came from:

• Europe (67.7%, from European Union: 52.5%)
• Asia / Oceania (18,6%)
• Middle East (12,4%)

The most common individual countries of origin are:

• Turkey (15%)
• Poland (10%)
• The Russian Federation (6,58%)
The official language in Germany is German. In addition to that, English is common as a business language. This is especially true for international companies. In the border regions, it is not uncommon that the official language of the respective neighboring country is spoken during business meetings, especially:

• French
• Dutch
• Polish
The Federal Republic has a direct connection to the Atlantic Ocean via the Northern and Baltic Sea. The German mainland coast is approximately 1,200 km long.
Germany is a parliamentary democracy. Head of state is the President (Bundespräsident); the government is headed by the chancellor (Bundeskanzler).
The official currency is the Euro. Currently, 1 Euro equals 38,87 THB (exchange rate February 19, 2018).
Germany has a federal structure and comprises 16 states (Bundesländer):

• Schleswig Holstein
• Mecklenburg-Vorpommern
• Hamburg
• Lower Saxony
• Bremen
• Brandenburg
• Berlin
• Saxony-Anhalt
• North Rhine-Westphalia
• Hesse
• Thuringia
• Saxony
• Rhineland-Palatinate
• Saarland
• Bavaria
• Baden-Württemberg

The federal states each have a parliament, government and capital. The legislative powers are distributed between the federal and state parliaments in the German constitution, with the majority of legislative powers lying with the federal parliament.

Public Holidays

Holiday  Date Federal states 
New Year's Day 01.01.2022 ( Saturday) Nationwide
Epiphany 06.01.2022 ( Thursday ) Baden-Wuerttemberg, Bavaria and Saxony-Anhalt
International Women's Day  08.03.2022 ( Sunday ) Berlin 
Good Friday 15.04.2022 (Friday ) Nationwide
Easter Sunday 17.04.2022 ( Sunday ) Brandenburg
Easter Monday 18.04.2022 ( Monday ) Nationwide
Labor Day 01.05.2022 ( Sunday ) Nationwide
Ascension Day 26.05.2022 ( Thursday ) Nationwide
Pentecost / Whitsunday 05.06.2022 ( Sunday ) Brandenburg
Pentecost Monday / Whitmonday 06.06.2022 ( Monday ) Nationwide
Corpus Christi 16.06.2022 ( Thursday ) Baden-Wuerttemberg, Bavaria, Hesse, North Rhine-Westphalia, Rhineland-Palatinate und Saarland
Assumption Day 15.08.2022 ( Monday ) Bavaria und Saarland
German Unification Day 03.10.2022 ( Monday ) Nationwide
Reformation Day 31.10.2022 ( Monday ) Brandenburg, Mecklenburg-Vorpommern, Saxony, Saxony-Anhalt und Thuringia
All Saints’ Day 01.11.2022 ( Tuesday ) Baden-Wuerttemberg, Bavaria, North Rhine-Westphalia, Rhineland-Palatinate und Saarland
Day of Prayer and Repetance 16.11. 2022 (Wednesday)    Saxony
Christmas Day 25.12.2022 ( Sunday ) Nationwide
2nd Day of Christmas / Boxing Day 26.12.2022 ( Monday ) Nationwide

Tax and Legal

Legal Restrictions
Freedom of trade is granted in the German constitution. This is reflected in the comparatively liberal laws governing trade, most importantly the trade code (GewO). In principle, this also applies to foreigners wishing to work in Germany.

However, restrictions for foreigners may derive from German immigration law, especially from the Residence Act (Aufenthaltsgesetz) and the Immigration Act (Zuwanderungsgesetz).

Foreigners who want to pursue an occupation in Germany usually need a residence permit, which expressly allows the employment (Aufenthaltserlaubnis) or inherently gives the holder the right to work in Germany (Niederlassungserlaubnis).

1) Self-Employment
As of 01.08.2012, the prerequisites under which foreign nationals may engage in self-employment in Germany have been lowered significantly. There is no longer a minimum sum that has to be invested or a minimum number of jobs that have to be created.

In order to get a residence permit for self-employed activities, the foreigner will have to show that there is an economic interest or local need for the proposed activity, that the proposed activity will have a positive effect on the economy and that the financing of the project is secured through either equity capital or a loan commitment.

The responsible governmental authority will evaluate each case individually and also consider aspects of communal politics. The alien authorities have wide discretion in these matters.

2) Employment
A corresponding residence permit is also required for employed work.

The application for a residence permit with permission to work should include a conclusive job offer or a contract of employment as well as a job description that is to be filled out by the employer.

DThe permission is usually granted if the employment of foreigners does not have negative effects on the labor market, no preferred employees (German citizens, EU-citizens, citizens of EEA-Members) are available and foreign employees are not employed under less favorable conditions than Germans.

3) Business Visa

Foreigners who want conduct business in Germany without transferring their permanent residence to the Federal Republic need a business visa.

4) EU und EEA
EU-citizens, citizens of EEA member states and their spouses can perform employed or self-employed work in Germany under the same conditions that apply to German nationals.

5) Foreign Legal Entities

Foreign Legal Entities do not need a specific license or permission in order to conduct business in Germany. They are subject to the same regulations that apply to German legal entities.

Foreign legal entities from outside of the EU only have legal capacity under German law if they are recognized as legally capable under the law of the place of founding. In addition to that, the entity must prove that its administrative center and its substantial business center are at the place of founding.
Forms of EstablishmentGerman corporate law recognized various types of legal entities.

A basic distinction is made between private and public companies. The main difference between the two company forms is that shareholders in a private company are usually liable with their private property for company liabilities.

The most common private companies are the

• Civil law partnership (GbR)
• General partnership (OHG)
• Limited partnership (KG)

Among the capital companies, practically relevant are especially the

• Limited company (GmbH)
• Stock corporation (AG)

The basic structures of German companies are similar to those of Thai companies, but differ in details.Differences arise mainly with regard to the founding process.

Apart from establishing a new company, there are several other ways to become active in Germany:

Foreign entities can establish a dependent (without its own bookkeeping) or independent branch. While the latter does not, in itself, have legal capacity, it conducts its work economically independent from the foreign entity. For foreign citizens who want to move to Germany in order to work for the inland establishments, the aforementioned restrictions apply.

A German citizen can represent one or several foreign entities as a commercial representative.

Foreign companies may also form a joint venture with German companies. All forms of corporations can be used in all possible combinations.
Labor LawAs of now, there is no conclusive labor act in Germany. Relevant legislation can be found in numerous individual legislations. These include in particular the German Civil Code (BGB) and the Labor Court Act (ArbGG).

The statutory minimum wage in Germany is €8.50.

Workers are covered by mandatory social insurance. Contributions to social security are paid pro rata by the employer and the employee.

Special provisions to protect employees are found in various legislations such as the Maternity Protection Act (MuSchG). In general, the daily working time must not exceed 8 hours. No work may be conducted on Sundays and public holidays. There are, however numerous exceptions to this rule.

Special regulations on salaries and working hours may arise in particular from collective agreements. Here the Collective Agreements Act (TVG) must be observed. Work councils are formed based on the Works Council Constitution Act (BetrVG).

Employment contracts are usually concluded indefinitely. Time limitations are possible under certain restricted statutory conditions.

In case of termination, both the provisions made in the BGB and applicable sections in the Employment Protection Act (KSchG) need to be observed. For indefinite employment contracts, the statutory periods of notice are to be observed. A termination without notice is only possible if the contract is terminated for a serious reason.

Furthermore, the General Equal Treatment Act (AGG), and European regulations must be observed.

Special labor courts are responsible for labor related disputes.
Taxes in Germany
Taxes in Germany derive from a number of different statutes. In accordance with Germany’s federal structure, taxes are collected on three levels: federal, state and communal.

Among the taxes collected, the following are the most important:

• Income tax
• Corporate tax
• Turnover tax
• Withholding tax (common tax)
• Energy tax
• Tobacco tax
• Liquor tax
• Coffee tax
• Insurance tax
• Vehicle tax
• Electricity tax
• Solidarity surcharge (federal level)
• Inheritance tax
• Real estate tax
• Race bettin and lottery tax (state level)
• Trade tax
• Land tax (communal level)

Special financial courts are responsible for legal disputes concerning tax issues.

There is a double taxation agreement between Germany and Thailand regarding the taxation of income.
Import and Export Germany is a member of the European Union (EU).

In principle the import of goods from Thailand into Germany is not subject to special restrictions.

Exceptions are listed in the Annex to the Federal Act on Foreign Trade (Außenwirtschaftsgesetz). Further restrictions may derive from the applicable customs law or EU Regulations.

Similar regulations also apply for the import of goods into Thailand. Special provisions for certain goods are made in the Export and Import Act and the List of Goods under Import Control.

Import duty in Thailand is raised in accordance with the Brussels Nomenclature (HS-Code). Customs rates usually depend on the value of the goods.
Legal Proceedings
Thai judgments are neither recognized nor enforced in Germany. As regards foreign arbitration decisions, enforcement is much less complicated and more promising due to international agreements.

*All information has been researched to the best of our knowledge and with the utmost care. Nevertheless, no liability is assumed for accuracy and completeness. This section is only intended to give a general overview over relevant legal regulations in Thailand. It is not designed to replace the consultation of a qualified lawyer.

Business Opportunities

Geographic Location and Infrastructure Development Due to its geographical position, Germany is a key transportation hub in Europe

Germany possesses a well-developed road and rail network as well as several international airports (including Frankfurt/Main and Munich).

By the end of 2021, the volume of railway transportation between Europe and Germany will have integrated railway solutions, setting a benchmark for 20% growth. That being stated, Germany is already in an attempt to get its trains "back on track" because the climate crisis and the far-reaching consequences of Covid-19 have persuaded the German government to accelerate its transition to more sustainable mobility systems, with trains playing a key role.

The German economy expanded by 2.7% in 2021, with a nominal gross domestic product (GDP) of about 1,009.3 US billion dollars (4.44 trillion Euros) in December 2020, compared with 981.4 US billion dollars in the previous quarter.

Followed by the increased GDP, it was 2.7% higher in 2021 than in 2020 because the economic development was highly dependent on Covid-19 infection rates and the associated preventive measures also in 2021.
Global Business

Germany is the largest economy in Europe and the fourth largest in the world. In Addition, Germany was the third-largest importer and exporter worldwide, measured by the value of goods.

Germany’s major industries are car manufacture, machinery, household equipment, and chemicals. By far the largest part of the total economic output in Germany is generated by the service industry (73,8%). It is followed by the industrial sector (25.5%). Only 0.7% of the total economic output can be attributed to the agricultural sector. Mining has a long tradition in Germany. The country possesses several mineral resources including coal, noble salts, industrial metals and building materials as well as silver, iron and tin. As an industrial country, Germany specializes in global raw material imports of all kinds.

Within the European Union, Germany is Thailand’s most important trading partner. According to Thai trade records, Germany is by far Thailand's most important economic partner in the European Union, ranking 16th in terms of exports and 11th in terms of imports. In 2020, German firms exported 4.17 billion euros to Thailand and bought 5.65 billion euros from the country. As a result, bilateral trade volume decreased by 11% compared to 2019. However, this decrease was more than overcome in the first half of 2021. Over 600 German companies operate in Thailand, and the huge number of German visitors (almost 900,000 per year prior to the pandemic) also played a significant role in the nations' ties.

Germany is dominated by four industries: automotive, mechanical, engineering, chemical, and electrical. In 2021, the German economy recovered from the previous year's Corona-related slump, but not as dramatically as expected. 

The global pandemic had a direct and devastating impact on the export-oriented German economy in 2020/21. Global demand for German-made goods fell sharply, and the epidemic led to Germany's worst loss in import and export volumes since the 2009 financial crisis. 

In 2020, Germany will have exported products worth around 1.2 trillion euros and purchased items worth approximately 1.0 trillion euros. Exports were down 9.3 percent year on year, while imports were down 7.1 percent.

Stable Framework

Germany provides stable political and financial framework conditions and an overall good investment climate.

Key branches of the German economy include the:

• Automotive industry
• Electric industry
• Gastronomy and tourism industry
• Logistics
• ICT sector
• Machinery and plant construction

Important German export goods are mainly:

• Vehicles and motor vehicle parts
• Machinery
• Chemical products

Germany intends to dramatically boost onshore wind energy as part of the Easter Package by changing the Renewable Energy Act (EEG). Furthermore, between now and the end of the 2020s, Germany plans to install up to 10 GW of new onshore wind power every year.

Clean energy will account for 46% of Germany's net public power output in 2021. This is down from 50% in 2020, according to Fraunhofer ISE, Europe's premier solar energy institute.

Aside from that, Berlin has set 2030 as the goal for powering Europe's largest electricity market with 65 percent renewable energy. This is because the European Union, of which Germany is the most powerful member, has set a target of reducing net emissions by 55% from 1990 levels by 2030. This is intended to be a step toward the United Nations target of "net-zero" emissions by 2050, which was set in an effort to mitigate the worst excesses of climate change.

According to the Federal Statistics Office, German families with a monthly net income of fewer than 1,300 euros (percent 1,475) spent about 10% of their entire income on energy in 2020, the most recent year for which data is available. Energy expenses were for 6.1 percent of consumer spending across all income levels, up from 5.8 percent in 2019.