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Foreign Investment in Germany |
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 Germany offers an attractive investment climate. Foreign firms are
generally treated as equals to national firms when investing.
There is no limit on the percent of equity foreigners may own, or on the size of their investment.
Licenses
No license is required for any type of investment, although certain
large-scale investments, and other investments that may affect national
security, are precluded. Certain investments must be reported for
statistical purposes. Investments are not subject to foreign-exchange
controls. Profits and dividends may be freely repatriated without
restrictions of any kind. Germany has a well-established system of
arbitration of commercial disputes, and enforces (through its courts)
arbitral awards. Germany is also a signatory to the UN Convention on
Recognition and Enforcement of Foreign Arbitral Awards.
Laws
Investors should be aware of certain requirements when investing in
Germany. For example, German antipollution laws are stringent. The
Ministry for the Environment enforces existing laws and will soon
implement decrees and laws pertaining to a 1986 water-pollution law. A
series of recycling programs started with a packaging decree of 1991.
These restrictions will apply to manufacturing and the impact of the
legislation should be considered when investing in manufacturing (new
or existing). Finally, special attention should be paid to EC
environ-mental restrictions.
Incentives
Germany has introduced a number of incentives and other
special conditions to encourage investments in eastern Germany.
Sub-stantial investments grants and tax incentives will be available
for investors in eastern Germany through the end of 1993. Investors
should also consider the following:
* Accelerated tax depreciation may be available in certain cases;
* In many cases municipal trade taxes in eastern Germany are not in effect until target dates;
* The European Recovery Program (ERP) has provided credit for
investments in eastern Germany if they meet relevant guidelines.
Germany will continue to offer other programs as it seeks to develop
eastern Germany. Interested parties should contact the Treuhandanstalt
(Trust Agency), which is the holding company assigned to privatize
state-owned assets and firms in eastern Germany. The Treuhandanstalt
has signed an agreement with the EC to computerize information, making
it more readily available to foreign investors, and has an office in
New York City.
Challenges
Investors should recognize that certain challenges may exist with
eastern German enterprises, and that Treuhandanstalt's mission to
privatize businesses in eastern Germany takes the nature of tendered
bids as well as the size of such bids into account. This has caused
some confusion among potential investors, but it also reflects
Germany's dedication to encourage serious investment and avoid
speculation on properties. Characteristics of former state-owned firms
include: heavily depreciated and obsolete capital stock; labor
intensive production processes; environmental problems; and decline in
sales revenue due to shocks of the open market.
 This resource is extracted from the Department of Commerce National Trade Databank (NTDB)
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