Germany Company Formation

With the largest economy in Europe and a leading export market in machinery, vehicles and household equipment, Germany offers a strong economic environment for forming a company. Germany's large domestic market, easy access to other markets in the EU and a low inflation rate places German companies in an advantageous trade position.

Germany has signed Double Taxation Treaties with more than 80 countries around the world, providing relief from withholding tax on dividends, interest and royalties. These agreements follow the Organisation for Economic Cooperation and Development (OECD) model.

In its 2011 World Competitiveness Yearbook, the Switzerland-based IMD positively ranks Germany as the world’s 10th-most competitive economy. The ranking takes into account factors such as economic performance, government efficiency, business efficiency and infrastructure.

The World Economic Forum's Global Competitiveness Report ranks Germany as the world's 6th-most competitive economy. The report is one of the world’s most comprehensive and respected assessment of countries’ competitiveness, offering invaluable insights into the policies, institutions, and factors driving productivity.

According to the 2010 Quality of Living Survey by Mercer Human Resources, Germany has seven of its cities rated in the Top 50 cities globally: Dusseldorf (6th); Frankfurt (7th); Munich (7th); Berlin (17th); Hamburg (23rd); Nurnburg (24th); and Stuttgart (30th). After incorporating a company in Germany, Healy Consultants assists entrepreneurs obtain Germany employment and residence visas, as well as being able purchase Germany property.

Companies in Germany are liable to paying two levels of tax: corporate tax of 15%, and trade tax levied and determined at the municipal-level. As there are no uniform rates for the overall tax burden of corporations across the country, firms may find themselves paying between 22.83%-29.83%, depending on the town or city which it is based in.

The German labour market is highly rigid, and this is an important caveat for companies seeking to start-up in Germany. According to World Bank Group's 2011 Ease of Doing Business Index, Germany ranked 158th out of 183 countries for 'Rigidity of Employment', indicating difficulty for companies to hire and fire staff.

In the Heritage Foundation's 2011 Index of Economic Freedom, Germany ranks as the world's 23rd-freest economy, classified as only 'mostly free' in terms of investment freedom and capital flows. This is measure indicates the levels of freedom enjoyed in business, trade, monetary, financial, investment and labour markets.

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