Foreign Direct Investment in Germany

Overview by

FDI in Figures

Germany is an attractive country for direct foreign investment. However, due to the global financial crisis, the FDI flows dried up and should remain less dynamic even in the coming years.
The country's strengths are: a fabric of the industrial sector which is dense and powerful, a skilled workforce which has a good command of the English language, as well as a geographic location in the center of Europe. Germany's main weakness is its high taxation rate (of both individuals and corporations).


Country Comparison For the Protection of Investors

  Germany OECD United States
Index of Transaction Transparency* 5.0 6.0 7.0
Index of Manager’s Responsibility** 5.0 5.2 9.0
Index of Shareholders’ Power*** 5.0 6.8 9.0
Index of Investor Protection**** 5.0 6.0 8.3

Source: Doing Business

Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action. **** The Greater the Index, the Higher the Level of Investor Protection.

Foreign Direct Investment 2007 2008 2009
FDI Inward Flow (million USD) 76,543 24,435 35,606
FDI Stock (million USD) 695,498 666,037 701,643
Performance Index*, Ranking on 141 Economies 107 127 113
Potential Index**, Ranking on 141 Economies 5 3 -
Number of Greenfield Investments*** 457 724 470
FDI Inwards (in % of GFCF****) 12.3 3.5 1.4
FDI Stock (in % of GDP) 20.9 18.2 21.0

Source: UNCTAD

Note: * The UNCTAD Inward FDI Performance Index is Based on a Ratio of the Country's Share in Global FDI Inflows and its Share in Global GDP. ** The UNCTAD Inward FDI Potential Index is Based on 12 Economic and Structural Variables Such as GDP, Foreign Trade, FDI, Infrastructures, Energy Use, R&D, Education, Country Risk. *** Green Field Investments Are a Form of Foreign Direct Investment Where a Parent Company Starts a New Venture in a Foreign Country By Constructing New Operational Facilities From the Ground Up. **** Gross Fixed Capital Formation (GFCF) Measures the Value of Additions to Fixed Assets Purchased By Business, Government and Households Less Disposals of Fixed Assets Sold Off or Scrapped.

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Why You Should Choose to Invest in Germany

Strong Points
Germany's strong points are:
- A strategic location at the center of Europe;
- The biggest population of the European Union;
- Advanced technology and expertise;
- A highly qualified work force;
- Competitive taxation.
Weak Points
Public finances are stucturally highly in deficit. The eastern part of the country is struggling to catch up in many fields. The ageing population weighs heavily on growth. The unemployment rate poses a real challenge for the development of the country and its future influence.
Government Measures to Motivate or Restrict FDI
The Germany government is implementing mesures aimed at encouraging investments in the country:

- Financing by the European Union and/or by German federal entities;
- Aid aimed especially at the initial investment phase but also at the operational phase of the project.

Bilateral Investment Conventions Signed By Germany
Germany has signed many bilateral agreements.
To see the list of countries, click here.
To see the conventions, click here.

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Procedures Relative to Foreign Investment

Freedom of Establishment
Acquisition of Holdings
Foreign investors may have a majority holding in the capital of a local company.
Obligation to Declare
The agency for the promotion of foreign investment in the country gives information about the authorizations necessary for setting up.
Competent Organization For the Declaration
Federal Office of Economics and Export Control
Requests For Specific Authorizations
Investments have to be governed by the policies and the procedures which are specific to the sector.  For more information refer to the BAFA.
Find Investment Service Providers in Germany on

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Investment Opportunities

Investment Aid Agency
Invest in Germany
Tenders, Projects and Public Procurement
Bundesausschreibungsblatt, Tenders official body (in German)
Tenders Info, Tenders in Germany
Ted - Tenders Electronic daily, Business opportunities in EU 27
DgMarket, Tenders Worldwide

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