8 Benefits of Starting a Business in Germany (2023)

Germany is the seventh largest country in Europe and is known to have one of the strongest economies in the region. This nation is home to some of the most iconic companies in the world. This includes car manufacturers such as Volkswagen, Mercedes- Benz, BMW, and Audi. The country.

Germany is also known for its advanced technology companies such as SAP and Siemens. Such companies have thrived because the country offers a great business environment for business owners. Let’s examine some of the benefits of starting a business in Germany.

  1. Strong and Stable Economy

Germany has one of the strongest and most stable economies in Europe. This can be attributed to the country’s heavy focus on exports and innovation. In fact, Germany is the EU country responsible for 29% of all exports to non-EU countries. It remains an open economy with a foreign trade quota of 84.4%. By contrast, the United States’ foreign trade quota is only 26.7%.

Germany’s continual progress in the manufacturing sectors has also ensured that plenty of countries will always be dependent on its exports. This leads to the country’s stability and ensures that its economy will always be a key player on the international stage.

  1. Access to a New Customer Base

Germany is one of the wealthiest countries in Europe with a GDP per capita of $50,800. The average gross annual salary in the country varies from $63,000 to $80,000. This means that Germans have plenty of money to spend on goods and services.

Entrepreneurs who start a business in Germany will have access to a consumer base with lots of disposable income and high spending power. This means they can offer a variety of premium goods and services without worrying whether people can afford them.

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This is one of the main reasons why entrepreneurs from countries where the average citizen has poor spending power opt to start businesses in Germany instead of their home country. However, it is important to note that certain German industries such as the automotive industry and manufacturing are highly saturated, so business owners should think twice about starting a business in these industries in the country.

  1. Access to a Highly Skilled Labor Pool

Many businesses set up shops in Germany to take advantage of the country’s highly-skilled labour pool. The country has some of the most distinguished facilities for higher learning. This includes places such as Technische Universität München, Ludwig-Maximilians-Universität München, and Ruprecht-Karls-Universität Heidelberg.

Such higher-educational institutions churn out tens of thousands of highly-educated individuals with desirable skill sets each year. Some of these graduates move abroad and find high-paying jobs in other countries. However, the vast majority stay in Germany and become part of its 42 million-person-strong workforce.

Entrepreneurs and business owners who start businesses in Germany will therefore have access to this pool of highly-skilled workers. This makes Germany a great choice for businesses seeking workers with degrees in mathematics, engineering, natural sciences, statistics, and computer sciences.

  1. Excellent Protection for Ideas and Concepts

Every business owner should understand the importance of protecting their ideas and concepts. After all, someone may have a million-dollar idea for their business, but others could steal this idea and profit off it if there aren’t any legal protections in place. The good news is that Germany offers many protections for such ideas and concepts.

Intellectual property is protected under many acts such as:

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  • The Copyright Act (UrhG),
  • The Trademark Act (MarkenG),
  • The Patent Act (PatG),
  • The Utility Model Act (GebrMG),
  • The Act Against Unfair Competition (UWG).
  • The Designs Act (GeschMG),

In addition to this, Germany’s civil code is embedded with many provisions pertaining to protecting intellectual property. All these provisions mean a business idea or concept will be well-protected in Germany and that any person or entity that attempts to steal and profit off them will be heavily penalized.

Germany’s Competition Laws also mean that people cannot make false claims about a business. Any individual or entity that does so will be charged with a crime.

  1. Existing Startup Culture

The recent surge in startups globally has altered the trajectory of many industries and spurred many different types of innovation. It is estimated that 26,000 startups are registered in the EU each year. Around 2,600 of these are registered in Germany.

NimbleFins, a research and analysis group that conducts studies on businesses in Europe ranked Germany as the #1 place for startups in 2019 and 2020. The group conducted their assessment based on factors such as economic health, cost of doing business, business climate, and labour force quality.

The organization cited Germany’s excellent access to venture capital as the main reason for its top ranking. There are estimated to be over 764 venture capital funds in the country, which means startup founders should have no problem approaching various fund providers to invest their ideas.

  1. Investment Incentives

Venture capital fund providers aren’t the only way for new businesses to get funding in Germany. There are also numerous public funding instruments that business owners and entrepreneurs can rely on. This includes:

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GRW Cash Grants

Gemeinschaftsaufgabe Verbesserung der regionalen Wirtschaftsstruktur, or GRW, is a special investment program aimed at creating new jobs and supporting economic development in the country. It provides grants for businesses in the manufacturing and service sectors to help cover part of their setup costs.

This includes funding to cover their capital expenditures such as purchasing machinery, equipment, and new buildings within the business’s first three years. It also covers personnel costs for businesses that have created new jobs for two years.

Research and Development Grants

The German government has also committed to spend approximately 3% of its GDP to fund research and development. It has created numerous programs explicitly for this purpose.

For example, KMU-innovativ is a funding scheme that offers funding for small and medium-sized businesses that focus on high-tech strategy technologies. The scheme provides funding on an ongoing basis and isn’t limited to any specific research areas.

Hiring Grants

The German Federal government has included many labour-related incentives for businesses. This includes:

  • Support when businesses are searching for staff
  • Grants to support employee training programs
  • Wage subsidies after hiring unemployed workers
  1. Greater Exposure

Setting up a business in Germany is also a great idea for businesses that wish to gain more exposure. As mentioned earlier, the German population has high spending power. However, the country also receives a large number of tourists.

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It is estimated that Germany was receiving up to 39 million tourists per year before the COVID-19 pandemic hit. The average tourist in Germany spends approximately $1,475 on their trips, meaning that businesses can expect tourists to contribute to a significant part of their revenue. This also gives local businesses greater exposure, which may help them attract business if they set up shop in other countries.

Germany is also considered the #1 location for trade shows. There are an estimated 160 to 180 national and international trade fairs held in the country each year. These attract ten million visitors and serve as excellent locations for businesses to get greater exposure. Business owners should therefore strive to exhibit their business at these shows to benefit from the special exposure they provide. Such exposure can boost their chances of succeeding internationally in the future.

  1. No Language Barrier

The language barrier can be the source of many problems for foreign entrepreneurs and business owners who wish to set up businesses in European countries. It can be difficult to understand laws and regulations written in a foreign language as well as interact with locals who don’t speak English.

Such problems aren’t likely to be an issue for people who start a business in Germany. Around 56% of Germans speak English, and business activities are often conducted in English in the country’s metropolitan and tourist areas. This means foreign business owners won’t need to worry about the language barrier when they set up shop in Germany.

Any language barrier issues are also likely to get smoothened over as the business hires more local workers who speak both German and English.

Why Choose OpenaEuropeanCompany?

As you can see, there are plenty of benefits associated with starting or expanding a business in Germany. However, the process of setting up a business properly while navigating through the country’s various business laws can be challenging to do on your own. Entrepreneurs and prospective business owners who need assistance with this should reach out to OpenAEuropeanCompany for assistance. We understand German business laws and can guide you through the business setup process correctly. Please contact us today to learn more about our services.

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FAQs

What are the benefits of doing business in Germany? ›

What are the benefits of doing business in Germany?
  • Deep commitment to innovation. ...
  • Significant consumer market. ...
  • Investment incentives. ...
  • Strong start-up culture. ...
  • Paying taxes. ...
  • Culture. ...
  • Registering property.
14 Apr 2022

Is it worth starting a business in Germany? ›

Germany Ranked Best Country for Start-Ups

Start a Business in Germany is one of the world's top ten most inventive countries, with a strong focus on leveraging science for economic gain. The country has a strong track record of effectively turning research into real-world applications.

Why Germany is the best country for business? ›

Germany is one of the most enticing countries in Europe for international business investment. It is an appealing investment destination due to its central location, convenient access to other EU markets, good infrastructure, and highly qualified workforce.

What are the advantages of Germany? ›

Germany offers a first quality manufacturing, energy and communications infrastructure and state-of-the-art transportation networks that provide quick access to domestic and international markets.

Why Denmark is a good country to start a business? ›

One of the reasons why Denmark has ease of doing business is because its cost of running businesses is low. Denmark has the lowest employer costs and social security rates in Europe. Its overhead costs like office rent are also quite cheaper than other trade cities in Europe.

What benefits do you get from starting a business? ›

The pros of starting a business
  • Rewards. Not everyone defines reward the same way. ...
  • Being your own boss. When you start a business and are self-employed, you are your own boss and ultimately control your own destiny.
  • Income. ...
  • Flexible hours. ...
  • Purchasing an existing business.

How much tax do businesses pay in Germany? ›

Corporate income tax rate plus solidarity surcharge are however determined nationwide. As a result, the statutory combined corporate tax rate can be as low as 22.8 percent. The German corporate tax average is around 29.8 percent.

What are the risks of doing business in Germany? ›

Challenges of Doing Business in Germany
  • Starting a Business is Difficult.
  • Payroll & Tax Laws Are Complicated.
  • Germany Has a Very Different Business Culture.
  • A Significant Degree of Regulatory Oversight.
  • Strong Employment Protections.
14 Aug 2022

Which country is No 1 in business? ›

Ranking
JurisdictionClassification2020
New ZealandVery Easy1
SingaporeVery Easy2
Hong KongVery Easy3
DenmarkVery Easy4
10 more rows

What is Germany's main business? ›

Germany's principal industries include machine building, automobiles, electrical engineering and electronics, chemicals, and food processing. Automobile manufacturing is concentrated in Baden-Württemberg, Lower Saxony, Hessen, North Rhine–Westphalia, Bavaria, the Saarland, and Thuringia.

Which country is best for own business? ›

Starting an International Business? Consider These 3 Countries
  1. Singapore. Singapore is a great place to start a business because it's small and incredibly favorable to industry. ...
  2. Sweden. Sweden, with its strong economy and low crime rate, is a great place to start a business. ...
  3. New Zealand.
16 Sept 2022

What are 5 important facts about Germany? ›

But for now, here are bits for you to chew on.
  • The largest train station in Europe is in Berlin.
  • Berlin is 9 times bigger than Paris.
  • There are more than 20,000 castles in Germany.
  • Germany is the EU's largest economy.
  • German is the third most widely taught language in the world.
  • The German language has 35 dialects.
2 Jul 2022

Which is the best country in Europe to start a business? ›

RankingDoing Business score World Bank
Denmark185.30
Sweden382.00
Norway282.60
Finland480.20
40 more rows

Which country in Europe is easiest to start a business? ›

According to the Ease of Doing Business Index, we found the top 5 European countries to set up a business in:
  • Germany. The fact that Germany is the largest economy in Europe and the fourth largest in the world says it all. ...
  • Ireland. ...
  • The Netherlands. ...
  • Norway. ...
  • Sweden.
24 Feb 2021

Where is the best country to live? ›

  • Sweden. #1 in Quality of Life. #5 in Best Countries Overall. ...
  • Denmark. #2 in Quality of Life. #10 in Best Countries Overall. ...
  • Canada. #3 in Quality of Life. ...
  • Switzerland. #4 in Quality of Life. ...
  • Norway. #5 in Quality of Life. ...
  • Finland. #6 in Quality of Life. ...
  • Germany. #7 in Quality of Life. ...
  • Netherlands. #8 in Quality of Life.

What is the biggest benefit of business? ›

Diversified Ways to Generate Revenue

When evaluating the pros and cons of big business, one of the major advantages of large firms is that they are able to establish multiple revenue streams to help offset economic downturns.

What is the most benefit business? ›

Health care service is a multibillion-dollar industry and one of the most profitable business ideas. A health care business can be so profitable because most people are willing to spend a lot of money on their health.

What are 3 advantages and 3 disadvantages of starting your own business? ›

At the same time, consider the advantages as well as the disadvantages of owning your own company.
  • Advantage: Financial Rewards. ...
  • Advantage: Lifestyle Independence. ...
  • Advantage: Personal Satisfaction and Growth. ...
  • Disadvantage: Financial Risk. ...
  • Disadvantage: Stress and Health Issues. ...
  • Disadvantage: Time Commitment. ...
  • Try a Side Hustle.

What is the main source of income in Germany? ›

Economy of Germany
Statistics
Average gross salary€4,168 monthly (2021)
Average net salary€2,647 monthly (2021)
Main industriesIron steel coal cement chemicals machinery vehicles machine tools electronics automobiles food and beverages shipbuilding textiles
Ease-of-doing-business rank22nd (very easy, 2020)
39 more rows

What is a good business to start in Germany? ›

Here is a list of some business ideas you can start in Germany that can be lucrative.
  • Career Counselling. ...
  • Online Marketing and Advertising. ...
  • Freelance Writing. ...
  • Educational Platforms or Centres. ...
  • Eco-Friendly and Recycling Services. ...
  • Integration Businesses. ...
  • Conclusion.
27 Jul 2022

What is the most in demand in Germany? ›

  1. Computer science, IT and software development. Unsurprisingly, in a large developed economy like Germany's, there is considerable demand for tech gurus. ...
  2. Electronics engineering. ...
  3. Mechanical engineering. ...
  4. Account management and business analytics. ...
  5. Nursing and healthcare. ...
  6. Civil engineering and architecture.
15 Nov 2022

How much salary is tax-free in Germany? ›

The basic tax-free allowance (Grundfreibetrag) ensures that you only pay income tax on your annual income above a certain threshold. In 2021 the basic tax-free allowance is 9.744 euros and will be increased to 10.347 euros in 2022.

What is a good salary in Germany after tax? ›

60.000 euros a year in Germany is considered a good gross salary as it is well above the average salary of 47.700 euros a year for the whole country. Most Germans who earn 60.000 euros or more are very happy with their salary.

Do foreigners pay more tax in Germany? ›

The German tax system for foreigners

Foreign residents must pay the same taxes as citizens in Germany, though there are agreements in place for those who are at risk of double taxation in Germany and their home country.

What is the biggest problem in Germany? ›

Germany's domestic intelligence agency put the Alternative für Deutschland (AfD) party under formal surveillance for potential extremist links in February 2021. The agency's chief identified far-right extremism as the biggest threat to democracy in Germany.

Can a company in Germany fire you? ›

Can I simply get fired? In principle, workers in Germany enjoy substantial protection against dismissal. If you have been working in a company with more than ten employees for more than six months, you cannot simply be dismissed.

Is it hard to open a business in Germany? ›

Technically it is not difficult to start a business in Germany. There are very clear steps that you need to take as a foreigner: Register your address in Germany. Get a residence permit for self-employment.

Which country is No 1 rich country? ›

The United States tops the list of countries with the largest number of billionaires. Forbes estimates that 735 of the world's 2,578 billionaires are American citizens.

What is the best country to start a business as a foreigner? ›

New Zealand is considered one of the easiest countries to open and run a business. This jurisdiction can rightly be called the best place for business, for a very fast registration of companies, unlike many other countries.

What is the best opportunity in the world? ›

  • Start a Digital Marketing Agency.
  • Start a Dropshipping Store.
  • Sell Digital Products.
  • Become a Blogger.
  • 5 Sell Handmade Goods.
  • Teach Online Courses.
  • Create a Print-on-Demand Store.
  • Run an Affiliate Marketing Business.

Which industry is best in Germany? ›

Industrial Production

Germany is the world's leading machinery and equipment manufacturer and the preferred location for investors looking to produce in Europe. It is also Europe' top location for electronics or chemical production.

What is the biggest business in Germany? ›

Largest companies by market capitalization in Germany 2022

SAP was the leading company in Germany by market capitalization as of November 2022, with approximately 127.2 billion U.S. dollars. SAP was established in 1972 in Germany and is the largest software company in Europe.

Why Germany is rich country? ›

In Germany the share of industry in gross value added is 22.9 per cent, making it the highest among the G7 countries. The strongest sectors are vehicle construction, electrical industry, engineering and chemical industry.

Which country is cheapest for business? ›

Singapore. Singapore is known to be the top startup hub among all the other countries. The most attractive feature of forming a company in Singapore is the simplified taxation system in the country. The tax system offers low rates for companies and businesses.

Which country is best for business in future? ›

  1. Japan. #1 in Best Countries for Entrepreneurs. ...
  2. Germany. #2 in Best Countries for Entrepreneurs. ...
  3. The United States. #3 in Best Countries for Entrepreneurs. ...
  4. The United Kingdom. #4 in Best Countries for Entrepreneurs. ...
  5. South Korea. #5 in Best Countries for Entrepreneurs. ...
  6. Canada. ...
  7. Switzerland. ...
  8. Singapore.

What is so unique about Germany? ›

Germany is one of the world's leading book nations. Publishing around 94,000 titles every year. The first magazine ever seen was launched in 1663 in Germany. Germany was the first country in the world to adopt Daylight saving time – DST, also known as summer time.

What is the longest German word? ›

The longest word in the standard German dictionary is Kraftfahrzeug-Haftpflichtversicherung – which is the word for motor vehicle liability insurance. But at 36 letters, it's rather puny. Rechtsschutzversicherungsgesellschaften, a touch longer at 39 letters, is the language's longest non-dictionary word.

What is Germany's real name? ›

The official name of the country is Federal Republic of Germany (Bundesrepublik Deutschland). The terms "Westdeutschland" and "Ostdeutschland" are still used for the western and the eastern parts of the German territory, respectively.

What industries is Germany known for? ›

Germany's most important industries

4 sectors dominate industry in Germany: the automotive, mechanical engineering, chemical and electrical industries. The global players are Volkswagen, Daimler, BMW (all automotive), BASF (chemical) and Siemens (electrical).

Can you survive in Germany with English? ›

There's no doubt that you can survive in Germany without knowing German. Every German usually studies English from the age of 5 and especially the younger generation watches British or American series.

Where should I live in Germany? ›

Best places to live in Germany
  • Munich. The capital of Germany's largest state, Bavaria, the southern German city of Munich, is often seen as the pinnacle of German culture and the German international identity. ...
  • Berlin. ...
  • Frankfurt. ...
  • Cologne. ...
  • Hamburg. ...
  • Dusseldorf. ...
  • Bonn. ...
  • Stuttgart.
18 Mar 2022

What is famous in Germany to buy? ›

12 German-Made Things to Buy in Munich
  • Heilemann Chocolates. ...
  • Dallmayr Coffee. ...
  • Traditional “Tracht” Clothing and Accessories. ...
  • Fine Scarves from Ludwig Beck. ...
  • “Brotzeit” Marzipan Arrangement. ...
  • Lebkuchenherzen. ...
  • Beer Stein from the Hofbräuhaus. ...
  • Eilles Tea.

Is Germany Good for business Management? ›

Known for excellent higher education and a highly developed economy, Germany is quite the attractive study abroad destination for many students worldwide. Now, studying management in Germany comes with many advantages and might just be the best choice for any student from the field of business.

Is Germany a good place to expand business? ›

On a global scale, Germany has a relatively low corporate tax rate at 15.285%, including the solidarity surcharge, making it an attractive destination for business expansion.

What are the tax benefits in Germany? ›

Tax allowances and exemptions in Germany

All workers in Germany are entitled to a tax-free allowance (€9,984 in 2022). Everyone must pay income tax on any income above this threshold. Employees are allowed a blanket allowance of €1,000 a year for business deductions.

Which field is best for future in Germany? ›

Do you want to study in Germany? Here are the top courses to study in Germany to avail more opportunities in the global market:
  • Medicine and Dentistry.
  • Law.
  • Industrial Engineering.
  • Engineering.
  • Mathematics and Computer Science.
  • Natural Sciences.
  • Business and economics.
  • Architecture.
22 Aug 2022

What are the business opportunities in Germany? ›

30 profitable small business ideas in Germany
  • Manufacturing spare parts: Germany is the centre for automobile companies. ...
  • Bakery: Starting a bakery business in Germany is also a profitable idea. ...
  • Day care or creche: ...
  • Elder homes: ...
  • Animal care: ...
  • Boutique: ...
  • Virtual assistance: ...
  • Laundry business:
22 Jun 2022

How much is monthly tax in Germany? ›

It's a progressive tax: if you earn more, you pay a bigger percentage of your income. If you earn less than 10,347€ per year, you don't pay income tax. The median income tax rate is around 18%.

Is it easy to start business in Germany? ›

Technically it is not difficult to start a business in Germany. There are very clear steps that you need to take as a foreigner: Register your address in Germany. Get a residence permit for self-employment.

What is German business culture like? ›

Communication in business culture and meetings is formal and employees speak to each other politely but efficiently. German work ethics mean employees always turn up on time and do a full day's work, they are in turn rewarded with fair pay and good working conditions.

Is Germany income tax high? ›

In Germany, the average single worker faced a net average tax rate of 37.7% in 2021, compared with the OECD average of 24.6%. In other words, in Germany the take-home pay of an average single worker, after tax and benefits, was 62.3% of their gross wage, compared with the OECD average of 75.4%.

Do foreigners pay tax in Germany? ›

Any expat living, working, and earning an income in Germany is liable to pay taxes— on a Federal and local level.

Do Germans pay a lot of taxes? ›

Income tax in Germany is progressive, starting at 1% and rising incrementally to 42% or for very high incomes, 45%. The tax rate of 42% applies to taxable income between €58,597 to 277,825 for 2022.

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