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Doing Business in Panama Doing Business in Germany www.votum.eu Doing business in Germany 2019 Doing business in Panama 2019 A member of www.mgiworld.com www.mgiworld.com 1 1 Contents ................................................. 2 7 Other forms of taxation ............ 15 2 Disclaimer ............................................. 2 7.1 Sales tax/VAT (Umsatzsteuer) 15 3 Introduction ........................................ 3 7.2 Real Estate Transfer Tax ............... 16 7.3 Inheritance and Gift Tax .............. 16 4 Germany ................................................. 4 7.4 Thin capitalisation rules .............. 17 4.1 Size and Population ........................ 4 7.5 Transfer pricing ................................. 17 01 4.2 Economy ................................................. 4 Contents 4.3 Currency and banking system 4 8 Intellectual Property Protection 18 4.4 Political system .................................. 5 8.1 Copyright ............................................... 18 4.5 Legal system ........................................ 5 8.2 Patents ..................................................... 18 8.3 Trademarks ........................................... 18 5 Forms of business enterprise .. 6 8.4 Design rights ........................................ 18 5.1 Sole proprietorship ........................ 6 5.2 Branches ................................................. 6 9 Labour relations ............................... 19 5.3 Corporations ....................................... 6 and social security 5.3.1 Limited Liability Company ........ 6 9.1 Terms of Employment .................. 19 (GmbH) 9.2 Anti Discrimination Act ................ 20 5.3.2 Stock Corporation (AG) ................ 7 9.3 Termination of Employment ... 21 5.3.3 Partnership Limited ....................... 7 9.4 The German Social ........................... 21 by Shares (KGaA) Security System 5.3.4 European Company ........................ 8 9.4.1 Health Insurance ............................... 21 5.4 Partnership ............................................ 8 9.4.2 Nursing Care Insurance ............... 21 5.4.1 Civil Law Partnership (GbR) ....... 8 9.4.3 Pension Insurance ........................... 21 5.4.2 General Commercial ........................ 8 9.4.4 Unemployment Insurance ........ 22 Partnerships (oHG) 9.4.5 Accident Insurance ......................... 22 02 ............. ... 5.4.3 Limited Partnership (KG) 8 9.4.6 Work and residence permits 22 Disclaimer 5.4.4 Corporate Partnership ................. 9 (GmbH & Co. KG) 10 Quality of life ...................................... 23 The information contained in 5.4.5 Partnership Company (PartG) 9 10.1 Education ............................................... 23 this booklet is intended solely 5.5 European Economic Interest ... 9 10.2 Communication & transport ... 23 to provide general guidance on Grouping (EWIV) 10.3 Social security benefits ............... 23 matters of interest for the personal use of the reader, who accepts full 6 Taxation of income ....................... 10 Contact Us ........................................................... 24 responsibility for its use. 6.1 Income tax – individuals ............. 10 While we have made every attempt 6.1.1 Unlimited individual ....................... 10 to ensure the information contained income tax in this booklet has been obtained 6.1.2 Limited individual income tax 11 from reliable sources, VOTUM AG 6.2 Income tax – companies ............ 11 Wirtschaftsprüfungsgesellschaft 6.2.1 Corporate Income Tax .................. 12 Steuerberatungsgesellschaft is (Körperschaftssteuer) not responsible for any errors or omissions. 6.2.2 Personal Income Tax for ............. 13 Partnerships (Einkommensteuer) Nothing herein shall to any extent 6.2.3 Trade Tax (Gewerbesteuer) ....... 13 substitute for the independent 6.2.4 Holding companies ......................... 13 investigations and the sound 6.3 Withholding taxes ............................ 13 technical and business judgement 6.3.1 Dividends ............................................... 14 of the reader. Laws and regulations are continually changing, and can 6.3.2 Interest ..................................................... 14 be interpreted only in the light of 6.3.3 Royalties .................................................. 14 particular factual situations. 6.3.4 Wage Tax ................................................. 14 2 www.votum.eu 03 This booklet presents an overview of matters to be Introduction considered by those contemplating investment in Germany. While it covers the relevant areas, it can, of course, not be exhaustive and it is emphasized that this booklet was not designed to provide the comprehensive and detailed information necessary to make investment decisions. All information contained in this booklet is as of January 2019. Frankfurt, August 31th, 2019 Alexander Leoff German Public Auditor www.mgiworld.com 3 The government is opening more paths for creativity, innovation, and the smooth delivery of goods and services. This is accomplished by means of educational and employment reforms designed to meet economic demands as well as financial support for businesses. Key economic indicators are: 04 Gross national income 2018: EUR 3.46 billion Germany Gross domestic product (GDP) 2018: EUR 3.39 billion GDP growth 2018: +1.4 % GDP per inhabitant 2018: EUR 40.852 Services 68.2 %, industry and Shares in the GDP: construction 31.1 %, agriculture 0.7 % Exports 2018: EUR 1.318 billion Imports 2018: EUR 1.090 billion Cars and car parts, machines, electronic Major export goods: products, pharmaceutical products 4.1 Size and Population 4.3 Currency and banks of the euro zone countries). As an independent central bank, the ECB With an area of approx. 357,092 banking system has sole authority to set monetary square kilometres (138,000 square policy. The Eurosystem participates in The euro (currency sign: €; banking miles) and a population of approx the printing, minting and distribution code: EUR) is the official currency of 82.98 million, Germany has the of notes and coins in all member the European Union (EU), used in 19 biggest population of all European states, and the operation of the member states known collectively countries. The population density of Eurozone payment systems. as the Eurozone (Austria, Belgium, 232 inhabitants per square kilometres Estonia, Cyprus, Finland, France, is close to the European average. While all European Union (EU) Germany, Greece, Ireland, Italy, Latvia, member states are eligible to join if Lithuania, Luxembourg, Malta, the they comply with certain monetary 4.2 Economy Netherlands, Portugal, Slovakia, requirements, not all EU members Slovenia, Spain). It is also used in have chosen to adopt the currency. With annual sales of more than EUR six further countries with formal All nations that have joined the EU 3.3 trillion in goods and services, agreements and three other countries since the 1993 implementation of Germany is the strongest economy without such agreements. Hence it the Maastricht Treaty have pledged to in Europe and one of the largest is the single currency for over 344 adopt the euro in due course. worldwide. Accounting for 17.82% million Europeans. Including areas of the EU’s GDP (28 countries) and using currencies pegged to the euro, Maastricht obliged current members 28.4% of the Euro-zone (19 countries), the euro directly affects close to 539 to join the euro; however, the United it is also the engine driving Europe’s million people worldwide. With more Kingdom and Denmark negotiated economy. Germany’s international than EUR 956 billion in circulation exemptions from that requirement competitive strengths are not as of December 2013 (equivalent to for themselves. Sweden turned down coincidental but rather the result of US$1,319 billion at the exchange rates the euro in a 2003 referendum, and sustained progress in the fields of at the time), the euro is the currency has circumvented the requirement to education, research, and innovation. with the highest combined value of join the euro area by not meeting the As a technology driven nation, cash in circulation in the world, having membership criteria. Germany is a leader in the filing of surpassed the U.S. dollar. patents relevant to international The special feature of the German markets and, measured according The euro was introduced to world banking system compared with to population size, is number two financial markets as an accounting most other industrialised countries worldwide in this category. currency in 1999 and launched as is the dominant position of universal physical coins and banknotes on 1 banks. While they differ considerably Germany’s economy is founded upon January 2002. It replaced the former in terms of legal form, ownership, the principle that the government, European Currency Unit (ECU) at a size, administrative organisation and the population, and the private sector ratio of 1:1. business structure, the great majority should work together to guarantee of credit institutions conduct every benefits and safety for all. Private The euro is managed and conceivable type of banking business enterprise is supported by laws administered by the Frankfurt-based under one roof. The commercial banks that provide businesses with an European Central Bank (ECB) and the may be grouped into three broad effective protection of their rights. Eurosystem (composed of the central categories: 4 www.votum.eu • the private commercial banks All three banking groups rely on In Germany, the administration
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