D e c emb er 1 , 2 0 2 1

RISE OF THE ROBOTS
Expansion to Germany

Christina Schoen
Senior Manager Tax & Legal Services
www.gtai.deGTAI Services.
Adviceand support to foreign companies expanding to Germany

Tax & Legal
Framework

Business
Opportunities

Market Entry
Strategy &Location
ProjectManagement
SupportMarketIntelligence
Financing& Incentives© GTAI 2

Business Location Germany
Investors have a great confidence in Germany as a business location.
USA

2.17

Canada2.10

Germany

2.07

UK

1.99

Japan

1.98

France1.95

AustraliaItaly

1.90
1.88

Spain

1.86

Switzerland

1.86

Source: 2021 Kearney‘s FDI Confidence Index

Governmental measuresduring the pandemic
stabilized the German
economy and ensured aquick production resume.

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German Market Presence
A subsidiary - the most popular option• Easier to conduct business through independent legal
entity and more credibility with third parties.
• German limited liability company – GmbH - most popularcompany form.
• German business address and a local representative onsite in Germany.
• Minimum share capital of EUR 25,000.
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German Market Presence
Corporate Structure of GmbH – Mandatory BodiesGmbH• Share capital EUR 25,000• German business address• Local representative

Managing Director (MD)• Representation• Management

Binding Instructions

Shareholders‘ Meeting• Supreme Body
• Binding Instruction for MD

The nationality and residence of the shareholder(s) and the managing director(s) of a GmbH are irrelevant.
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German Market Presence
Incorporation Procesee - Steps for setting up a GmbH.

Articles ofAssociation

Notarization¹(notary)

Bank AccountShare Capital

CommercialRegister

Trade office
notification²1) Shareholder(s) forming the GmbH, adopting its articles of association and appointing one or more managing directors in a notarial deed.
2) Selected business sectors (e.g. pharmacies, brokers, restaurants, hotels, financial service providers) require a permit / license for the notification© GTAI 6

Corporate Taxation
In Germany the corporate tax burden varies at the municipal level.

14.07% (ø)
Local Trade Tax:

Corporate Income Tax+ Solidarity Surcharge:

7% (min)15.83 %

15.83 %

29.9%

22.8%

The German corporate tax
average is 29.9% - but canbe as low as 22.8% insome areas.

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Corporate Taxation
Locally varying tax rates provides for a diversified tax landscapeHamburg 32.3 %Rellingen 27%

Berlin 30.2 %Schönefeld 24.2 %Cologne 32.5 %Mohnheim 24.6%

Frankfurt 31.9 %Eschborn: 27.4 %Munich 33 %Grünwald 24.2 %©https://www.destatis.de/DE/Themen/Staat/Steuern/Hebesaetze.html 2020

Corresponds Total
Corporate Income
Tax Rate in %22.83 - 26.68
26.68 - 27.56
27.56 - 28.26
28.26 - 28.78
28.78 - 29.30
29.30 - 30.53
30.53 and above
Unincorporated area

Many German metropolitan areas offer
locations with below
average tax rates.

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Incentives
Germany offers a wide range of funding instruments to back companies‘ capital needs.
Instruments

Funding Purposes• Grants• Investments• Equity• Working Capital• Loans• R&D• Loan collaterals• Specific Purposes• Mezzanine capital• Personnel

A combination of funding instruments is usually possible.
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Incentives -Investment Grants
GRW Program offers up to 40 percent investment grants.
*Until end of2027

Small
enterprises

Mediumenterprises

Largeenterprises

C region w.
bonus

max 40%

max 30%max 20%C Region*max 35%*max 25%*max 15%

D Regionmax 20%

max 10%max EUR 200k

* Grant intensities awaiting EU sign-off* C region w. bonus not restricted to border area
* Shaded areas mixed, defined after EU sign-off* Map will be valid 2022-2027** Sign-off should occur before December 2021

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Incentives - Investment Grants
GRW Program – necessary conditions:• 25% of eligible cost threshold mut be provided from non-subsidized source• Jobs created, and facilities put into operation as a part of the investment must stay inplace for five years• Pure sales and marketing activities/facilities, and consultancy activities excluded• Corporate ownership analyzed: 25% ownership threshold• For larger projects (>EUR 50m) aid intensity reduces incrementally• Companies must be in financial good health prior to the investment• Eligible costs assessed either on entire capital expenditure or 2 years’ wage costs.
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Incentives - R&D Grants
Programs at the EU, national andregional level available.
R&D Grants at the National Level• Technology-specific programs: High-Tech Strategy 2025
seven key areas of R&D.
• Research Tax Credit Act 2020 – companies performing
R&D Activities - possible tax credit up to EUR 1 m.
• Technology-open programs: Central Innovation Programfor SME (ZIM).
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Incentives – R&D Grant
Central Innovation Program - Technology
open program for SME• Applications possible at all times and without any
prior calls for proposals.
• Grant rates: between 25% and 60% (depending oncompany size, cooperation degree and location)• Max. eligible costs EUR 550k per project.

• Ongoing program – current directives up to end of2024.
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Entry & Residency
Important factors for a successful expansion
Employed Senior Executives, Managing Directors and InternalCompany Specialists require an approval of the Federal
Employment Agency (FEA) for a residence permit.
Overall individual assessment:• employment status +• same terms and conditions as comparable German employees
A specific professional qualification is not required for thiscategory.

Other residence titles as the ICT - or the Blue Card can beapplicable.
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Entry & Residency
ICT Card for intra-corporate transfers of qualified employees

Non-EU Entity
Japan

Temp. Transfer
Manager/Specialist

Host Entity
Germany

Temporary transfer of a non-EU manager / specialist for more than 90 days up to three years.
From a non EU entity to a host entity in Germany (same company / company group).
Simplified approval from Federal Employment Agency required (working conditions + salary).
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Entry & Residency
Success Story - EU Blue Card
More than 31,000 EU Blue Cards granted in Germany (2019)• Residence permit for non-EU Academics:
university degree (proven comparable to German one)
 job contract in Germany with annual gross salary ofabove EUR 56,800 (2021).
 job appropriate to qualification• Fast track to settlement permit, possible after 21 months.
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Pandemic Travel Restrictions-generally lifted for fully vaccinated travelers.
• For fully vaccinated persons, entry from third countries isgenerally allowed again since June 2021.
• Safe list – Germany allows unrestricted entry for residentsof specific third countries (depending on the pandemic
situation).
• Travelers from other third countries must present animportant reason for entering Germany.

• The pandemic situation quickly changes – always checkthe current information provided by the German mission
abroad.
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For further information:F
www.gtai.com/jp-investors-basics
www.gtai.com/investment-guidewww.gtai.com/corona© GTAI 18

Contact Us
Christina Schön

Senior Manager Tax & Legal
T +49 (0)30 200 099-506

christina.schoen@gtai.com
www.gtai.com

Germany Trade & Invest is the economic development agency of the Federal Republic of Germany. The company helps create and secure extra
employment opportunities, strengthening Germany as a business location. With more than 50 offices in Germany and abroad and its network ofpartners throughout the world, Germany Trade & Invest supports German companies setting up in foreign markets, promotes Germany as a businesslocation and assists foreign companies setting up in Germany.

SUPPORTED BY THE FEDERAL MINISTRY FOR ECONOMIC AFFAIRS AND ENERGYON THE BASIS OF A DECISION BY THE GERMAN BUNDESTAG.

© Germany Trade & Invest
All market data provided is based on the most current market information available at the time of publication.
Germany Trade & Invest accepts no liability for the actuality, accuracy, or completeness of the information provided.

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