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Global Expansion Handbook

Germany

The EU's largest economy and industrial powerhouse, with full automotive, machinery and chemicals supply chains — a base for the EU market and advanced technology. The usual vehicle is the GmbH, notarised and entered in the commercial register; corporate tax 15% plus solidarity surcharge and municipal trade tax, VAT 19%.

IndustryAutomotiveEU marketTier 1 · Core markets
Handbook
Updated 2026-11-13
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01Overview

Region
Europe
Capital
Berlin
Currency
EUR
Languages
German (official)
ISO code
DE / DEU

Jurisdictions

  • Germany — Federal level; trade tax multipliers set by each municipality

China's direct investment

China's 2025 FDI flow
20.8 USD 100m
End-2025 FDI stock
202.3 USD 100m
Flow rank
#10 by flow

Source：2025 Statistical Bulletin of China's Outward Foreign Direct Investment ↗ · Flow is for calendar 2025; stock is at end-2025. Flow rank is from Table 8 (top 20); other countries from Annex Tables 1–2 (originally USD 10k, converted to USD 100m; one decimal, two below 1). A negative flow means divestment exceeded new investment that year.

Macro indicators such as GDP and population are not included yet; see official statistics such as the World Bank.

02Market Entry

Industries to study: Cross-border e-commerce & consumer brandsMedical devices & pharma

Foreign ownership

Whether 100% foreign ownership is generally allowed, and key exceptions. Allowed / conditional / not allowed / unverified.

Generally treated the same as domestic investors

Applies to
Non-EU acquisitions in critical infrastructure, defence and key technologies need federal investment screening
Jurisdiction
Germany
Source
MOFCOM
Local SubsidiaryIncorporate a separate legal entity in the target countryDistributor / AgentUse a local partner's channels and licencesBranch / Representative OfficeA local presence that is an extension of the parent

03Business Formation

Common legal entity

The company form most commonly used by foreign investors for a local operating entity.

Limited liability company (GmbH)

Applies to
UG (haftungsbeschränkt) and other forms also exist
Jurisdiction
Germany
Source
Common Register Portal of the German Federal StatesGermany Trade & Invest (GTAI)

Registration authority

Primary authority for company or commercial registration.

Local court commercial register (via notary)

Applies to
Articles must be notarised by a German notary
Jurisdiction
Germany
Source
Common Register Portal of the German Federal States

Foreign ownership

Whether 100% foreign ownership is generally allowed, and key exceptions. Allowed / conditional / not allowed / unverified.

Generally treated the same as domestic investors

Applies to
Non-EU acquisitions in critical infrastructure, defence and key technologies need federal investment screening
Jurisdiction
Germany
Source
MOFCOM

Local director / representative

Whether a locally resident director, manager or representative is required.

No residence or nationality requirement for directors

Applies to
Applies to GmbH managing directors; foreign nationals working locally need a residence permit
Jurisdiction
Germany
Source
Common Register Portal of the German Federal States

Local registered address

Whether a local registered address or premises is required at incorporation.

A registered address in Germany is required

Applies to
A corporate service address may be used if it can receive statutory documents
Jurisdiction
Germany
Source
Common Register Portal of the German Federal States

Beneficial ownership register

Whether companies must keep or file ultimate beneficial owner information.

Beneficial owners must be registered in the Transparency Register

Applies to
Ordinary companies
Jurisdiction
Germany
Source
Transparenzregister

Foreign-entity setup flow

Main approval stages for a foreign investor setting up an entity (no time estimates).

Notarised articles → pay in capital → notary files with the commercial register → trade registration → tax registration

Applies to
Excludes processing time estimates
Jurisdiction
Germany
Source
Common Register Portal of the German Federal States

04Taxation

Headline corporate income tax

Statutory headline rate for ordinary companies, before incentives, exemptions, thresholds or special regimes. Always read with the conditions.

15% (corporate income tax)

Applies to
Plus solidarity surcharge and municipal trade tax, varying by municipality; under the 2025 investment programme act the rate falls one point a year from 2028 to 10% in 2032
Jurisdiction
Germany
Source
Federal Central Tax Office (BZSt)
Cross-check

Taxationconsistent

Indirect tax (VAT / GST / SST)

Standard rate and type of VAT, GST or sales & service tax.

VAT standard rate 19%

Applies to
A reduced 7% rate applies to some goods and services
Jurisdiction
Germany
Source
Federal Central Tax Office (BZSt)

Tax authority

Authority responsible for corporate tax registration and filing.

Local tax offices; BZSt for certain matters

Applies to
Ordinary companies
Jurisdiction
Germany
Source
Federal Central Tax Office (BZSt)

Dividend withholding tax (non-residents)

General withholding on dividends paid to foreign shareholders, before treaty relief.

26.375% (25% plus solidarity surcharge)

Applies to
Can be reduced or refunded under the China–Germany treaty
Jurisdiction
Germany
Source
State Taxation AdministrationFederal Central Tax Office (BZSt)

Tax treaty with China

Whether a double taxation agreement with China is in force. Rates and conditions per the treaty text.

In force (new treaty effective 2016)

Applies to
Rates and conditions per the treaty text and STA publications
Jurisdiction
Germany
Source
State Taxation Administration (China)State Taxation Administration

05Banking & Payments

Exchange controls

Whether general exchange controls or cross-border fund rules apply.

No exchange controls

Applies to
Cross-border payments carry statistical reporting duties under the Foreign Trade Act
Jurisdiction
Germany
Source
MOFCOM

Banking & financial regulator

Primary regulator for banking and foreign exchange.

Deutsche Bundesbank (Eurosystem); Federal Financial Supervisory Authority (BaFin)

Applies to
Ordinary companies
Jurisdiction
Germany
Source
MOFCOM

06Employment

Foreign employee work permit

Main permit types needed for foreign employees to work legally.

Residence permit with work authorisation (e.g. EU Blue Card)

Applies to
Issued by the foreigners' authority with review by the Federal Employment Agency's ZAV
Jurisdiction
Germany
Source
MOFCOM

Labour & work permit authority

Authority for labour rules and foreign employee work permits.

Federal Employment Agency's ZAV; foreigners' authorities

Applies to
Ordinary companies
Jurisdiction
Germany
Source
MOFCOM

Social security contributions

Main employer social security schemes for local and foreign employees.

Statutory pension, health, long-term care, unemployment and accident insurance

Applies to
Broadly shared by employer and employee; Chinese posted workers may be exempt from pension and unemployment insurance under the China–Germany agreement
Jurisdiction
Germany
Source
Deutsche Rentenversicherung

07Trade & Customs

Customs authority

Authority for import/export clearance and tariffs.

German Customs, applying the EU common customs tariff

Applies to
Ordinary companies
Jurisdiction
Germany
Source
MOFCOM

Main free trade agreements

Main regional and bilateral trade agreements relevant to Chinese exporters (not exhaustive).

EU trade agreements (about 80 countries and territories)

Applies to
Ordinary companies
Jurisdiction
Germany
Source
MOFCOM

08Investment & Manufacturing

Investment authority / agency

Body responsible for approving, registering or promoting foreign investment.

Germany Trade & Invest (GTAI)

Applies to
Promotion agency, not an approval body; acquisitions in some sectors may need investment screening
Jurisdiction
Germany
Source
Germany Trade & Invest (GTAI)

Free zone / SEZ regime

Whether free zones or special economic zones operate under rules different from the mainland.

Mainly industrial parks; no dedicated special economic zones

Applies to
Ordinary companies
Jurisdiction
Germany
Source
MOFCOM

09Digital & IP

Personal data protection law

Main law and regulator governing collection, use and cross-border transfer of personal data.

EU General Data Protection Regulation (GDPR)

Applies to
Ordinary companies
Jurisdiction
Germany
Source
MOFCOM

IP office

Authority for trademark and patent filing and registration.

German Patent and Trade Mark Office (DPMA)

Applies to
Trademark rights are territorial; register locally or designate via the Madrid System (check WIPO membership)
Jurisdiction
Germany
Source
WIPO

10Compliance & Risk

New York Convention party

Whether the country is party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, which affects enforcing foreign arbitral awards locally.

Yes

Applies to
Foreign arbitral awards can be enforced under the Convention, subject to its limited refusal grounds
Jurisdiction
Germany
Source
UNCITRAL

Live risk monitoring

Geopolitical, conflict and trade-route risk events for Europe, monitored by our sister site Global Risk Monitor.

View Europe risk monitor

Global Risk Monitor · Geopolitical and trade-route risk monitoring

11Step-by-Step

Main setup steps in Germany

  1. 1Notarised articles
  2. 2pay in capital
  3. 3notary files with the commercial register
  4. 4trade registration
  5. 5tax registration
General checklist (setting up a subsidiary)
  1. Decide model and jurisdiction
  2. Confirm licences
  3. Prepare documents
  4. Incorporate
  5. Register for tax
  6. Open bank account
  7. Obtain operating licences
  8. Start operations

Steps follow the setup-procedure fact on this page, without times or fees; rely on the official sources.

12Official Resources

Chinese official resources

Country materials from MOFCOM, the State Taxation Administration and China's overseas commercial offices

Official guides are long Chinese-language PDFs updated on the publishers' schedules. Our structured facts cite local authorities as primary sources; use these guides to cross-check.

Local authorities