2023 Investment Climate Statements: Germany

Policies Towards Foreign Direct Investment

The German government and industry actively encourage foreign investment. The 1956 U.S.-Federal Republic of Germany Treaty of Friendship, Commerce and Navigation affords U.S. investors national treatment and provides for the free movement of capital between the United States and Germany. As an Organization for Economic Co-Operation and Development (OECD) member, Germany adheres to the OECD National Treatment Instrument and the OECD Codes of Liberalization of Capital Movements and of Invisible Operations.  The Foreign Trade and Payments Act and the Foreign Trade and Payments Ordinance provide the legal basis for the Federal Ministry for Economic Affairs and Climate Action (MEC) to review acquisitions of domestic companies by foreign buyers and to assess whether these transactions pose a risk to the public order or national security (for example, when the investment pertains to critical infrastructure).  For many decades Germany has experienced significant inbound investment, which is widely recognized as a considerable contributor to Germany’s growth and prosperity. The investment-related challenges facing foreign companies are broadly the same as those that face domestic firms, e.g., relatively high tax rates and energy costs, stringent environmental regulations, and labor laws that complicate hiring and dismissals. Germany Trade and Invest (GTAI), the country’s economic development agency, provides extensive information for investors: https://www.gtai.de/gtai-en/invest 

Limits on Foreign Control and Right to Private Ownership and Establishment

Under German law, a foreign-owned company registered in the Federal Republic of Germany as a GmbH (limited liability company) or an AG (joint stock company) is treated the same as a German-owned company. There are no special nationality requirements for directors or shareholders.
Companies seeking to open a branch office in Germany without establishing a new legal entity, (e.g., for the provision of employee placement services, such as providing temporary office support, domestic help, or executive search services), must register and have at least one representative located in Germany.
While there are no economy-wide limits on foreign ownership or control, Germany maintains an elaborate mechanism to screen foreign investments based on national security grounds. The legislative basis for the mechanism (the Foreign Trade and Payments Act and Foreign Trade and Payments Ordinance) has been amended several times in recent years to tighten parameters of the screening as technological threats evolve, particularly to address growing interest by foreign investors in both Mittelstand (mid-sized) and blue-chip German companies. Proposed foreign investments over 10 percent in several sectors, including sectors related to military goods and IT security products, must notify MEC of their intention. Any planned acquisition of over 25 percent of voting rights must notify MEC.
https://www.bmwi.de/Redaktion/EN/Artikel/Foreign-Trade/investment-screening.html In the screening process, MEC also considers “stockpile acquisitions” by the same investor in a German company or “atypical control investments” where an investor secures additional influence in company operations via side contractual agreements. MEC can also factor in combined acquisitions by multiple investors if all are controlled by one foreign government. The total time for the screening process, depending on the sensitivities of the investment, may take up 10 to 12 months.

Other Investment Policy Reviews

The World Bank Group’s “Doing Business 2020” Index provides additional information on Germany’s investment climate. [Note: this report is no longer updated]. The American Chamber of Commerce in Germany publishes results of an annual survey of U.S. investors in Germany (“AmCham Germany Transatlantic Business Barometer.” https://www.amcham.de/publications ).

Business Facilitation

Companies and business operators must register in public directories before engaging in commercial activities. The major public directories are the commercial register (Handelsregister) and the trade office register (Gewerberegister).
Applications for registration in the commercial register ( www.handelsregister.de ) are electronically filed in publicly certified form through a notary.  The commercial register provides information about all relevant relationships between merchants and commercial companies, including names of partners and managing directors, capital stock, liability limitations, and insolvency proceedings.  Registration costs vary depending on the size of the company. According to the World Bank’s Doing Business Report 2020, the median duration to register a business in Germany is eight days, though some firms have experienced longer processing times.
Germany Trade and Invest (GTAI), the country’s economic development agency, can assist in the registration processes ( https://www.gtai.de/gtai-en/invest/investment-guide/establishing-a-company/business-registration-65532 ) and advises investors, including micro-, small-, and medium-sized enterprises (MSMEs), on how to obtain incentives.
In the EU, MSMEs are defined as follows:

• Micro-enterprises:  fewer than 10 employees and less than €2 million annual turnover or less than €2 million in balance sheet total.
• Small enterprises:  fewer than 50 employees and less than €10 million annual turnover or less than €10 million in balance sheet total.
• Medium-sized enterprises:  fewer than 250 employees and less than €50 million annual turnover or less than €43 million in balance sheet total.

U.S.-based exporters seeking to sell in Germany (e.g., via commercial platforms) are required to register with one specific tax authority in Bonn, which can lead to significant delays due to capacity issues.

Outward Investment

Germany’s federal government provides guarantees for investments by Germany-based companies in developing and emerging economies and countries in transition in order to insure them against political risks. In order to receive guarantees, the investment must have adequate legal protection in the host country. The Federal Government does not insure against commercial risks. In 2021, the government issued investment guarantees amounting to €2.6 billion, three times higher than in the previous year, for 20 investment projects in 11 countries. The regional distribution was 50percent for projects in in China, Malaysia, and India and 37percent in Egypt, Kenya, Nigeria, South Africa, and Tunisia.

Transparency of the Regulatory System

Germany has transparent and effective laws and policies to promote competition, including antitrust laws. The legal, regulatory, and accounting systems are complex but transparent and consistent with international norms.
Public consultation by federal authorities is regulated by the Joint Rules of Procedure, which specify that ministries must consult early and extensively with a range of stakeholders on all new legislative proposals. In practice, laws and regulations in Germany are routinely published in draft form for public comment. According to the Joint Rules of Procedure, ministries should consult the concerned industries’ associations, consumer organizations, environmental, and other NGOs. The consultation period generally takes two to eight weeks.
Recently, the federal government passed Environmental, Social and Governance (ESG) regulations on sustainability, climate change, renewable energy, and gender equality.
The German Institute for Standardization (DIN), Germany’s independent and sole national standards body representing Germany in non-governmental international standards organizations, is open to German subsidiaries of foreign companies.

International Regulatory Considerations

As a member of the European Union, Germany must observe and implement directives and regulations adopted by the EU. EU regulations are binding and enter into force as immediately applicable law. Directives, on the other hand, constitute a type of framework law that Member States transpose via their respective legislative processes. Germany regularly adheres to this process.
EU Member States must transpose directives within a specified time period. Should a deadline not be met, the Member State may suffer the initiation of an “infringement procedure,” which could result in steep fines. Germany has a set of rules that prescribe how to break down any payment of fines devolving to the Federal Government and the federal states (Länder). Both bear part of the costs. Payment requirements by the individual states depend on the size of their population and the respective part they played in non-compliance. As of April 2021, 80 total infringement cases remained open against Germany.
In accordance with WTO membership requirements, the Federal Government notifies draft technical regulations to the WTO Committee on Technical Barriers to Trade (TBT) through the Federal Ministry of Economic Affairs and Energy.

Legal System and Judicial Independence

German law is stable and predictable.  Companies can effectively enforce property and contractual rights.  Germany’s well-established enforcement laws and official enforcement services ensure investors can assert their rights.  German courts are fully available to foreign investors in an investment dispute.
The judicial system is independent, and the government does not interfere in the court system.  The legislature sets the systemic and structural parameters, while lawyers and civil law notaries use the law to shape and organize specific situations.  Judges are highly competent and impartial. International studies and empirical data have attested that Germany offers an effective court system committed to due process and the rule of law.
In Germany, most important legal issues and matters are governed by comprehensive legislation in the form of statutes, codes, and regulations.  Primary legislation in the area of business law includes:

• the Civil Code (Bürgerliches Gesetzbuch, abbreviated as BGB), which contains general rules on the formation, performance, and enforcement of contracts and on the basic types of contractual agreements for legal transactions between private entities;
• the Commercial Code (Handelsgesetzbuch, abbreviated as HGB), which contains special rules concerning transactions among businesses and commercial partnerships;
• the Private Limited Companies Act (GmbH-Gesetz) and the Public Limited Companies Act (Aktiengesetz), covering the two most common corporate structures in Germany – the ‘GmbH’ and the ‘Aktiengesellschaft’; and
• the Act on Unfair Competition (Gesetz gegen den unlauteren Wettbewerb, abbreviated as UWG), which prohibits misleading advertising and unfair business practices.

Apart from the regular courts, which hear civil and criminal cases, Germany has specialized courts for administrative law, labor law, social law, and finance and tax law.  Many civil regional courts have specialized chambers for commercial matters. In 2018, the first German regional courts for civil matters (in Frankfurt and Hamburg) established Chambers for International Commercial Disputes, introducing the possibility to hear international trade disputes in English.  Other federal states are currently discussing plans to introduce these specialized chambers as well. In November 2020, Baden-Wuerttemberg opened the first commercial court in Germany with locations in Stuttgart and Mannheim, with the option to choose English– language proceedings. As of 2021, two International Chambers were established at the Regional Court of Berlin: one for commercial disputes and disputes concerning unfair trade practices and trademark matters, and the other for disputes concerning construction law and general civil law disputes. Both chambers are open to parties who wish to bring disputes in the English language in matters with international dimension.
The Federal Patent Court hears cases on patents, trademarks, and utility rights related to decisions by the German Patent and Trademarks Office.  Both the German Patent Office (Deutsches Patentamt) and the European Patent Office are headquartered in Munich.

Laws and Regulations on Foreign Direct Investment

In the case of acquisitions of critical infrastructure and companies in sensitive sectors, the threshold for triggering an investment review by the government is 10 percent. The Federal Ministry for Economic Affairs and Climate Action (MEC) may review acquisitions of domestic companies by foreign buyers, regardless of national security concerns, where investors seek to acquire at least 25 percent of the voting rights to assess whether these transactions pose a risk to the public order or national security of the Federal Republic of Germany.
MEC officials told Post the mere prospect of rejection has caused foreign investors to pull out of prospective deals in sensitive sectors in the past. All national security decisions by the Ministry can be appealed in administrative courts.
Investitionsprüfung in Deutschland (bmwk.de) 
There is no general requirement for investors to obtain approval for any acquisition unless the target company poses a potential national security risk, such as operating or providing services relating to critical infrastructure, is a media company, or operates in the health sector. The Federal Ministry for Economic Affairs and Climate Action may launch a review within three months after obtaining knowledge of the acquisition; the review must be concluded within four months after receipt of the full set of relevant documents. An investor may also request a binding certificate of non-objection from the Federal Ministry for Economic Affairs and Climate Action in advance of the planned acquisition to obtain legal certainty at an early stage.
If the Federal Ministry for Economic Affairs and Climate Action does not open an in-depth review within two months from the receipt of the request the certificate is deemed as granted. During the review, MEC may ask to submit further documents. The acquisition may be restricted or prohibited within three months after the full set of documents has been submitted.
The German government has continuously amended domestic investment screening provisions in recent years to transpose the relevant EU framework and address evolving security risks. An amendment in July 2017 clarified the scope for review and gave the government more time to conduct reviews, in reaction to an increasing number of acquisitions of German companies by foreign investors with apparent ties to national governments. The amended 2017 provisions provide a clearer definition of sectors in which foreign investment can pose a threat to public order and security, including operators of critical infrastructure, developers of software to run critical infrastructure, telecommunications operators or companies involved in telecom surveillance, cloud computing network operators and service providers, and telematics companies, and which are subject to notification requirements. The new rules also extended the time to assess a cross-sector foreign investment from two to four months, and for investments in sensitive sectors, from one to three months, and introduced the possibility of retroactively initiating assessments for a period of five years after the conclusion of an acquisition. Indirect acquisitions such as those through a Germany- or EU-based affiliate company are now also explicitly subject to the new rules.
With further amendments in 2020, Germany implemented the 2019 EU Screening Regulation. A further amendment came into force in May 2021.
The amendments
a) introduced a more pro-active screening based on “prospective impairment” of public order or security by an acquisition, rather than a de facto threat; b) consider the impact on other EU member states; and c) formally suspend transactions during the screening process.
Furthermore, acquisitions by foreign government-owned or -funded entities now trigger a review, and the healthcare industry is now considered a sensitive sector to which the stricter 10percent threshold applies. In May 2021, a further amendment entered into force, which introduced a list of sensitive sectors and technologies (like the current list of critical infrastructures), including artificial intelligence, autonomous vehicles, specialized robots, semiconductors, additive manufacturing, and quantum technology. Foreign investors who seek to acquire at least 10percent of ownership rights of a German company in one those fields must notify the government and potentially become subject to an investment review. The screening can now also consider “stockpiling acquisitions” by the same investor, “atypical control investments” where an investor seeks additional influence in company operations via side contractual agreements, or combined acquisitions by multiple investors, if all are controlled by one foreign government.
The Ministry for Economic Affairs and Climate Action provides comprehensive information on Germany’s investment screening regime on its website in English:
https://www.bmwi.de/Redaktion/EN/Artikel/Foreign-Trade/investment-screening.html 
Germany Trade and Invest (GTAI) provides extensive information for investors on their website that covers the legal framework, labor-related issues, and incentive programs: http://www.gtai.de/GTAI/Navigation/EN/Invest/investment-guide.html .

Competition and Antitrust Laws

The German government ensures competition on a level playing field based on two main legal codes.
The Law against Limiting Competition (Gesetz gegen Wettbewerbsbeschränkungen – GWB) is the legal basis for limiting cartels, merger control, and monitoring abuse. State and Federal cartel authorities are in charge of enforcing anti-trust law. In exceptional cases, the Minister for Economic Affairs and Climate Action can provide a permit under specific conditions.
A June 2017 amendment to the GWB expanded the reach of the Federal Cartel Office (FCO) to include internet and data-based business models, resulting in several proceedings against U.S. tech companies.
In 2021, a further amendment to the GWB, known as the Digitalization Act, entered into force codifying tools that allow greater scrutiny of digital platforms by the FCO, in order to “better counteract abusive behavior by companies with paramount cross-market significance for competition.” The law aims to prohibit large platforms from taking certain actions that put competitors at a disadvantage, including in markets for related services or up and down the supply chain – even before the large platform becomes dominant in those secondary markets. To achieve this goal, the amendments expanded the powers of the FCO to act earlier and more broadly. Since 2021, the Cartel Office has commenced investigations against five U.S. platforms – Alphabet/Google, Amazon, Meta/Facebook, Apple and Microsoft – including assessment of whether they fall under the scope of the new legislation. In four cases (Alphabet, Amazon, Apple and Meta) the competition authority determined the companies will be subject to abuse control measures under the scope of the new law. The investigation against Microsoft is still ongoing.
While the focus of the GWB is to preserve market access, the Law against Unfair Competition seeks to protect competitors, consumers, and other market participants against unfair competitive behavior by companies. This law is primarily invoked in regional courts by private claimants rather than by the FCO.

Expropriation and Compensation

German law provides that private property can be expropriated for public purposes only in a non-discriminatory manner. There is due process and transparency of purpose, and investors in and lenders to expropriated entities are entitled to receive prompt, adequate, and effective compensation.
The Berlin state government has so far not implemented a successful 2021 referendum (59 percent in favor) submitted by a citizens’ initiative calling for the expropriation of residential apartments owned by large private corporations (3,000 or more residential units in the housing and real estate sector). At least one party in the governing coalition officially supports the proposal. Certain long-running expropriation cases date back to the Nazi and communist regimes.

Dispute Settlement

ICSID Convention and New York Convention

Germany is a member of both the International Center for the Settlement of Investment Disputes (ICSID) and New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, meaning local courts must enforce international arbitration awards under certain conditions.

Investor-State Dispute Settlement

Investment disputes involving U.S. or other foreign investors in Germany are rare. According to the UNCTAD database of known treaty-based investor dispute settlement cases, while Germany has been challenged a handful of times, none of the disputes involved U.S. investors.

International Commercial Arbitration and Foreign Courts

Germany has a domestic arbitration body called the German Arbitration Institute (DIS). The body offers commercial arbitration in accordance with UNCITRAL arbitration standards. The German arbitration law in Book 10, Sections 1025 to 1066 of the German Code of Civil Procedure addresses relevant provisions that apply to all arbitration proceedings. Arbitration proceedings are also occasionally conducted under other arbitration rules from the International Chamber of Commerce (ICC) and other internationally recognized guidelines, for example, the International Bar Association (IBA) and the Prague Rules (2018). The ICC has an office in Berlin. In addition, local chambers of commerce and industry offer arbitration services.

Bankruptcy Regulations

German insolvency law, as enshrined in the Insolvency Code, supports and promotes restructuring. If a business or the owner of a business becomes insolvent, or a business is over-indebted, insolvency proceedings can be initiated by filing for insolvency; legal persons are obliged to do so. Insolvency itself is not a crime, but deliberately filing late for insolvency is.
Under a regular insolvency procedure, the insolvent business is generally broken up in order to recover assets through the sale of individual items or rights or parts of the company. Proceeds can then be paid out to creditors in the insolvency proceedings. The distribution of monies to creditors follows detailed instructions in the Insolvency Code.
Equal treatment of creditors is enshrined in the Insolvency Code. Some creditors have the right to claim property back. Post-adjudication preferred creditors are served out of insolvency assets during the insolvency procedure. Ordinary creditors are served on the basis of quotas from the remaining insolvency assets. Secondary creditors, including shareholder loans, are only served if insolvency assets remain after all others have been served. Germany ranks fourth in the global ranking of “Resolving Insolvency” in the World Bank’s Doing Business Index, with a recovery rate of 79.8 cents on the dollar.
In December 2020, the Bundestag passed legislation implementing the EU Restructuring Directive to modernize and make German restructuring and insolvency law more effective.
In October 2022, the Bundestag (and Bundesrat) passed legislation amending insolvency and restructuring laws granting temporary relief to companies facing insolvency due to energy price increases and fluctuations on the energy and raw materials markets resulting from Russia’s war of aggression against Ukraine. The “Act on the Temporary Adaptation of Restructuring and Insolvency Law Provisions to Mitigate the Consequences of the Crisis” (in short: Restructuring and Insolvency Law Crisis Consequences Mitigation Act – “SanInsKG”) – which has yet to be promulgated – aims to provide relief for companies that are “in essence healthy” and capable of surviving in the long term, but for which forward-looking liquidity planning is not possible now, or only possible to a limited extent, due to the current price volatility.

Investment Incentives

Federal and state investment incentives – including investment grants, labor-related and R&D incentives, public loans, and public guarantees – are available to domestic and foreign investors alike. Different incentives can be combined. In general, foreign and German investors must meet the same criteria for eligibility.
Germany’s Climate Action Program provides targeted support for research and development into climate-friendly technologies, through which it aims to build on Germany’s position as a leading provider and a lead market for such technology. The Energy and Climate Fund, which is scheduled to reach a volume of $220 billion (200 billion EUR) by 2026, is the main instrument for financing Germany’s energy transition and climate action measures. It facilitates investments in climate protection and security of supply.
The federal government also funds a program offering subsidized loans or nonrepayable cash grants to support the purchase of equipment leading to energy savings. Up to 45 percent of energy efficiency expenditures by large enterprises and 55 percent of expenditures by SMEs are eligible for coverage under the program.
Germany Trade & Invest (GTAI), Germany’s federal economic development agency, provides comprehensive information on incentives in English at: https://www.gtai.de/gtai-en/invest/investment-guide/incentive-programs .

Foreign Trade Zones/Free Ports/Trade Facilitation

There are currently two free ports in Germany operating under EU law: Bremerhaven and Cuxhaven. The duty-free zones within the ports also permit value-added processing and manufacturing for EU-external markets, albeit with certain requirements. All are open to both domestic and foreign entities. In recent years, falling tariffs and the progressive enlargement of the EU have eroded much of the utility and attractiveness of duty-free zones.

Performance and Data Localization Requirements

In general, there are no discriminatory export policies or import policies affecting foreign investors: no requirements for local sourcing, export percentage, or local or national ownership. In some cases, however, there may be performance requirements tied to an incentive, such as creation of jobs or maintaining a certain level of employment for a prescribed length of time.
Visa, residence, and work permit procedures for foreign investors are non-discriminatory and, for U.S. citizens (as investors or employees), generally liberal. No restrictions exist on the numbers of foreign managers brought in to supervise foreign investment projects. Work permits for managers can be granted for a maximum of three years and permits can only be renewed after a six-month “cooling off period.”
U.S. companies can generally obtain the visas and work permits required to do business in Germany. U.S. citizens may apply for work and residential permits from within Germany. Germany Trade & Invest offers detailed information online at https://www.gtai.de/gtai-en/invest/investment-guide/coming-to-germany .
There are no general localization requirements for data storage in Germany. However, the invalidation of the Privacy Shield by the European Court of Justice in July 2020 in the Schrems II case has led not only to increased calls for localized data storage in Germany but also to greater scrutiny by the German data protection commissioners of U.S. service providers handling German user data. In recent years, German and European cloud providers have also sought to market the domestic location of their servers as a competitive advantage.

Real Property

The German Government adheres to a policy of national treatment, which considers property owned by foreigners as fully protected under German law. In Germany, mortgage approvals are based on recognized and reliable collateral. Secured interests in property, both chattel and real, are recognized and enforced. According to the World Bank’s Doing Business Report, it takes an average of 52 days to register property in Germany.
The German Land Register Act dates to 1897. The land register mirrors private real property rights and provides information on the legal relationship of the estate. It documents the owner, rights of third persons, as well as liabilities and restrictions. Any change in property of real estate must be registered in the land registry to make the contract effective. Land titles are now maintained in an electronic database and can be consulted by persons with a legitimate interest.

Intellectual Property Rights

Germany has a robust regime to protect intellectual property rights (IPR). Legal structures are strong and enforcement is good. Nonetheless, internet piracy and counterfeit goods remain challenging, and specific infringing websites are occasionally included in USTR’s Notorious Markets List. Germany has been a member of the World Intellectual Property Organization (WIPO) since 1970. The German Central Customs Authority annually publishes statistics on customs seizures of counterfeit and pirated goods. The statistics for 2021 are available at
https://www.zoll.de/SharedDocs/Broschueren/DE/Die-Zollverwaltung/jahresstatistik_2021.html 
Germany is party to the major international IPR agreements: the Berne Convention for the Protection of Literary and Artistic Works, the Paris Convention for the Protection of Industrial Property, the Universal Copyright Convention, the Geneva Phonograms Convention, the Patent Cooperation Treaty (PCT), the Brussels Satellite Convention, the Rome Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations, and the World Trade Organization (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). Many of the latest developments in German IPR law are derived from European legislation with the objective to make applications less burdensome and allow for European IPR protection.
The following types of protection are available:
Copyrights: National treatment is granted to foreign copyright holders, including remuneration for private recordings. Under the TRIPS Agreement, Germany grants legal protection for U.S. performing artists against the commercial distribution of unauthorized live recordings in Germany. Germany is party to the World Intellectual Property Organization (WIPO) Copyright Treaty and WIPO Performances and Phonograms Treaty, which came into force in 2010. Most rights holder organizations regard German authorities’ enforcement of IP rights as effective. In 2008, Germany implemented the EU Directive (2004/48/EC) on IPR enforcement with a national bill, thereby strengthening the privileges of rights holders and allowing for improved enforcement action. Germany implemented the Digital Single Market Directive with the “Act to Adapt Copyright Law to the Requirements of the Digital Single Market,” which entered into force on June 7, 2021. This new law implemented necessary changes to the German Copyright Act. As part of the implementing legislation parliament passed the new Copyright Service Provider Act, which entered into force on August 1, 2021.
Trademarks: National treatment is granted to foreigners seeking to register trademarks at the German Patent and Trademark Office. Protection is valid for a period of ten years and can be extended in ten-year periods. It is possible to register for trademark and design protection nationally in Germany or for an EU Trademark and/or Registered Community Design at the EU Intellectual Property Office (EUIPO). These provide protection for industrial design or trademarks in the entire EU market. Both national trademarks and European Union Trade Marks (EUTMs) can be applied for from the U.S. Patent and Trademark Office (USPTO) as part of an international trademark registration system, or the applicant may apply directly for those trademarks from EUIPO at https://euipo.europa.eu/ohimportal/en/home .
Patents: National treatment is granted to foreigners seeking to register patents at the German Patent and Trade Mark Office. Patents are granted for technical inventions that are new, involve an inventive step, and are industrially applicable. However, applicants having neither a domicile nor an establishment in Germany must appoint a patent attorney in Germany as a representative filing the patent application. The documents must be submitted in German or with a translation into German. The duration of a patent is 20 years from the patent application filing date. When filing the application, Patent applicants can request accelerated examination under the Global Patent Prosecution Highway (GPPH), provided that the patent application was previously filed at the USPTO and that at least one claim had been determined to be patentable. There are a number of differences between U.S. and German patent law, including the filing systems (“first-inventor-to-file” versus “first-to-file”, respectively), which a qualified patent attorney can explain to U.S. patent applicants. German law also offers the possibility to register designs and utility models.
A U.S. applicant may file a patent in multiple European countries through the European Patent Office (EPO), which grants European patents for the contracting states to the European Patent Convention (EPC). The 38 contracting states include the entire EU membership and several additional European countries; Germany joined the EPC in 1977. It should be noted that some EPC members require a translation of the granted European patent in their language for validation purposes. The EPO provides a convenient single point to file a patent in as many of these countries as an applicant would like: https://www.epo.org/applying/basics.html . U.S. applicants seeking patent rights in multiple countries can alternatively file an international Patent Coordination Treaty (PCT) application with the USPTO.
Trade Secrets: Trade secrets are protected in Germany by the Law for the Protection of Trade Secrets, which has been in force since April 2019 and implements the 2016 EU Directive (2016/943). According to the law, the illegal accessing, appropriation, and copying of trade secrets, including through social engineering, is prohibited. Explicitly exempt from the law is “reverse engineering” of a publicly available item, and appropriation, usage, or publication of a trade secret to protect a “legitimate interest,” including journalistic research and whistleblowing. The law requires companies implement “adequate confidentiality measures” for information to be protected as a trade secret under the law. Owners of trade secrets are entitled to omission, compensation, and information about the culprit, as well as the destruction, return, recall, and ultimately the removal of the infringing products from the market.
For additional information about national laws and points of contact at local IPR offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/ .
For additional information about how to protect IPR in Germany, please see the Germany Trade and Invest (GTAI) website at https://www.gtai.de/en/invest/investment-guide/company-set-up 
Statistics from 2021 on the seizure of counterfeit goods are available through the German Customs Authority (Zoll):
Zoll online – Broschüren – Gewerblicher Rechtsschutz – Statistik für das Jahr 2021 
Businesses can also join the Anti-counterfeiting Association (APM):
http://www.markenpiraterie-apm.de/index.php?article_id=1&clang=1 

Capital Markets and Portfolio Investment

As an EU member state with a well-developed financial sector, Germany welcomes foreign portfolio investment and has an effective regulatory system. Capital markets and portfolio investments operate freely with no discrimination between German and foreign firms. Germany has a very open economy, routinely ranking among the top countries in the world for exports and inward and outward foreign direct investment. As a member of the Eurozone, Germany does not have sole national authority over international payments, which are a shared task of the European Central Bank and the national central banks of the 19 member states, including the German Central Bank (Bundesbank). A European framework for national security screening of foreign investments, which entered into force in April 2019, provides a basis under European law to restrict capital movements into Germany because of threats to national security. Global investors see Germany as a safe place to invest. German sovereign bonds continue to retain their “safe haven” status.
Listed companies and market participants in Germany must comply with the Securities Trading Act, which bans insider trading and market manipulation. Compliance is monitored by the Federal Financial Supervisory Authority (BaFin) while oversight of stock exchanges is the responsibility of the state governments in Germany (with BaFin taking on any international responsibility). Investment fund management in Germany is regulated by the Capital Investment Code (KAGB), which entered into force on July 22, 2013. The KAGB represents the implementation of additional financial market regulatory reforms, committed to in the aftermath of the global financial crisis. The law went beyond the minimum requirements of the relevant EU directives and represents a comprehensive overhaul of all existing investment-related regulations in Germany with the aim of creating a system of rules to protect investors while also maintaining systemic financial stability.

Money and Banking System

Although corporate financing via capital markets is on the rise, Germany’s financial system remains mostly bank-based. Bank loans are still the predominant form of funding for firms, particularly the small- and medium-sized enterprises that comprise Germany’s “Mittelstand,” or mid-sized industrial market leaders. Credit is available at market-determined rates to both domestic and foreign investors, and a variety of credit instruments are available. Legal, regulatory, and accounting systems are generally transparent and consistent with international banking norms. Germany has a universal banking system regulated by federal authorities; there have been no reports of a shortage of credit in the German economy. After 2010, Germany banned some forms of speculative trading, most importantly “naked short selling.” In 2013, Germany passed a law requiring banks to separate riskier activities such as proprietary trading into a legally separate, fully- capitalized unit that has no guarantee or access to financing from the deposit-taking part of the bank. Since the creation of the European single supervisory mechanism (SSM) in November 2014, the European Central Bank directly supervises 21 banks located in Germany (as of January 2022), among them four subsidiaries of foreign banks.
Germany has a modern and open banking sector characterized by a highly diversified and decentralized, small-scale structure. As a result, it is extremely competitive, profit margins notably in the retail sector are low, and the banking sector is considered “over-banked” and in need of consolidation. The country’s “three-pillar” banking system consists of private commercial banks, cooperative banks, and public banks (savings banks/Sparkassen and the regional state-owned banks/Landesbanken). This structure has remained unchanged despite marked consolidation within each “pillar” since the financial crisis in 2009. By the end of 2020 the number of state banks (Landesbanken) had dropped from 12 to 6, savings banks from 446 in 2007 to 377, and cooperative banks from 1,234 to 818. Two of the five large private-sector banks have exited the market (Dresdner, Postbank). The balance sheet total of German banks dropped from 304 percent of GDP in 2007 to 192 percent of year-end 2020 GDP with banking sector assets worth €9.1 trillion. Market shares in corporate finance of the banking groups remained largely unchanged (all figures for end of 2021): commercial banks 25.5 percent (domestic 16.2 percent, foreign banks 9.3 percent), savings banks 31.2 percent, credit cooperative banks 22 percent, regional Landesbanken 9.3 percent, and development banks/building and loan associations/mortgage banks 12 percent.
Germany’s retail banking sector is healthy and well capitalized in line with ECB rules on bank capitalizations. The sector is dominated by globally active banks, Deutsche Bank (Germany’s largest bank by balance sheet total) and Commerzbank (fourth largest bank), with balance sheets of €1.324 trillion and €473 billion respectively (2021 figures). Commerzbank received €18 billion in financial assistance from the federal government in 2009, for which the government took a 25 percent stake in the bank (now reduced to 15 percent). Merger talks between Deutsche Bank and Commerzbank failed in 2019. The second largest of the top ten German banks with €627 billion of assets per year-end 2021 is DZ Bank, the central institution of the Cooperative Finance Group (after its merger with WGZ Bank in July 2016), followed by German branches of large international banks (UniCredit Bank, ING-Diba), development banks (KfW Group, NRW Bank), and state banks (LBBW, Bayern LB, Helaba, NordLB).

German credit institutions’ operating business improved considerably in 2021. The cost-income ratio rose by 0.6 percent to 72.9 percent. Operating income rose by €5.8 billion (+4.8 percent). In 2021, German credit institutions reported a pre-tax profit of €27.1 billion, having risen by €12.8 billion and almost doubling the figure from the year prior. This pre-tax profit of €27.1 billion is also far above the long-term average of €17.6 billion and slightly higher than the average of the post-financial crisis years (2010 to 2018) of €25.4 billion. The credit institutions’ 2021 net interest income rose by 1.4 percent, the first time since 2018. Credit risk provisioning rose significantly due to the impact of the coronavirus pandemic on economic activity, reaching €5.3 billion or 0.8 percent of big banks’ annual average lending portfolio. In 2021, credit risk provisioning was significantly lower and provisions from 2020 were partly dissolved after feared credit defaults did not materialize. The banking sector’s average return on equity before tax in 2021 rose to 5.05 percent (after tax: 3.23 percent) (with savings banks and credit cooperatives generating a higher return, and big banks a negative return).

Foreign Exchange and Remittances

Foreign Exchange

As a member of the Eurozone, Germany uses the euro as its currency, along with 19 other EU countries. The Eurozone has no restrictions on the transfer or conversion of its currency, and the exchange rate is freely determined in the foreign exchange market. There is no difficulty in obtaining foreign exchange.
Germany is a member of the Financial Action Task Force (FATF) and is committed to further strengthening its national system for the prevention, detection and suppression of money laundering and terrorist financing. Federal law is enforced by regional state prosecutors. Investigations are conducted by the Federal and State Offices of Criminal Investigations (BKA/LKA). The administrative authority for imposing anti-money laundering requirements on financial institutions is the Federal Financial Supervisory Authority (BaFin).

Remittance Policies

There are no restrictions or delays on investment remittances or the inflow or outflow of profits.
In 2020, Germany was the largest source country for remittances in the EU, making up 17.4 percent of all outbound personal remittances of the EU-27 (Eurostat). Migrants in Germany posted €19.3 billion ($22 billion) (0.6 percent of GDP) abroad in 2020. Remittance flows into Germany amounted to around €15.7 billion ($ 17.9 billion) in 2020, approximately 0.5 percent of Germany’s GDP. Approximately 20 percent of remittances are paid through online channels and 80 percent are paid in cash.
During its G20 presidency in 2017, Germany passed an updated version of its “G20 National Remittance Plan,” which it has updated annually. The document states that Germany’s focus will remain on “consumer protection, linking remittances to financial inclusion, creating enabling regulatory frameworks and generating research and data on diaspora and remittances dynamics.” Current publications on the subject are available here:
https://www.gpfi.org/search/node/g20%20remittance%20plan 

Sovereign Wealth Funds

The German government does not currently have a sovereign wealth fund or an asset management bureau.

Privatization Program

Germany does not have any privatization programs currently. German authorities treat foreigners equally in privatizations of state-owned enterprises.

Additional Resources

Department of State

• Country Reports on Human Rights Practices ( https://www.state.gov/reports-bureau-of-democracy-human-rights-and-labor/country-reports-on-human-rights-practices/)
• Trafficking in Persons Report ( https://www.state.gov/trafficking-in-persons-report/)
• Guidance on Implementing the “UN Guiding Principles” for Transactions Linked to Foreign Government End-Users for Products or Services with Surveillance Capabilities ( https://www.state.gov/key-topics-bureau-of-democracy-human-rights-and-labor/due-diligence-guidance/)
• U.S. National Contact Point for the OECD Guidelines for Multinational Enterprises ( https://www.state.gov/u-s-national-contact-point-for-the-oecd-guidelines-for-multinational-enterprises/)
• Xinjiang Supply Chain Business Advisory ( https://www.state.gov/xinjiang-supply-chain-business-advisory/)

Department of the Treasury

• OFAC Recent Actions ( https://home.treasury.gov/policy-issues/financial-sanctions/recent-actions )

Department of Labor

• Findings on the Worst forms of Child Labor Report ( https://www.dol.gov/agencies/ilab/resources/reports/child-labor/findings  )
• List of Goods Produced by Child Labor or Forced Labor ( https://www.dol.gov/agencies/ilab/reports/child-labor/list-of-goods )
• Sweat & Toil: Child Labor, Forced Labor, and Human Trafficking Around the World ( https://www.dol.gov/general/apps/ilab )
• Comply Chain ( https://www.dol.gov/ilab/complychain/ )

Climate Issues

The government has an ambitious national climate strategy which, by law, requires the reduction of greenhouse gas emissions 65 percent by 2030, 88 percent by 2040, and the achievement of complete carbon neutrality by 2045. It also aims to source 100 percent of its electricity from renewables by 2035. To achieve this objective, it is investing heavily in renewables and implementing a combination of carrots and sticks for private companies to spur investment and deter continued use of climate-polluting energy sources. In 2022, the country earmarked $220 billion (€200 billion) to fund industrial transformation through 2026, including climate protection, hydrogen technology, and expansion of its electric vehicle charging network. Since the summer of 2022, the government has been spending billions on new infrastructure to import LNG and clean hydrogen and has also been removing bureaucratic hurdles for renewable projects. States must designate two percent of their land for onshore wind energy, and solar energy panels will be mandatory on new commercial buildings. Germany also intends to phase out coal “ideally” by 2030, although Russia’s February 2022 invasion of Ukraine could lead to a delay as the government seeks alternatives to Russian oil and gas. The government aims to increase domestic rail freight transport by 25 percent, as moving freight by rail instead of trucks emits far fewer greenhouse gases, and it will advocate for EU legislation to encourage rail travel and greener forms of transport throughout the bloc. Germany is part of the EU’s greenhouse gas Emissions Trading System, which sets a price on carbon emissions from power stations, energy-intensive industries (e.g., oil refineries, steelworks, and producers of iron, aluminum, cement, paper and glass), and intra-European commercial aviation. The price for EU carbon emissions has increased nearly fourfold since 2020, a sign of the program’s increasing efficacy. In 2021, Germany also instituted a national emissions trading system to cover the transport and building heating sectors, two areas in which the EU program did not apply.
The Global Green Growth Institute ranked Germany seventh globally in its 2022 Green Growth Index. Germany ranked 11th in the category “Natural capital protection,” which takes factors such as environmental quality and biodiversity protection into consideration, and third in “Green economic opportunities,” which measures green investment, green trade, green employment, and green innovation. Germany also ranked eighth in ITIF’s 2021 Global Energy Innovation Index, three spots higher than in 2016. In 2022, Germany announced it would increase its annual funding for international biodiversity conservation to $1.62 billion (€1.5 billion) by 2025 – doubling its annual biodiversity financing from 2017 to 2021. The funds are part of the increase in the budget for international climate protection to at least $6.47 billion (€6 billion) per year by 2025.
Public procurement policies include environmental and green growth considerations such as resource efficiency, pollution abatement, and climate resilience. The German Environment Agency has formulated clear requirements and recommendations for climate change mitigation at public agencies, including their procurement policies, and has an environmental management system in place certified according to the EU Eco-Management and Audit System. The federal government and 11 of Germany’s federal states have committed to achieving greenhouse gas-neutral administration.

UN Anticorruption Convention, OECD Convention on Combatting Bribery

Germany was a signatory to the UN Anti-Corruption Convention in 2003. The Bundestag ratified the Convention in November 2014.
Germany adheres to and actively enforces the OECD Anti-Bribery Convention which criminalizes bribery of foreign public officials by German citizens and firms. The necessary tax reform legislation ending the tax write-off for bribes in Germany and abroad became law in 1999.
Germany participates in the relevant EU anti-corruption measures and signed two EU conventions against corruption. However, while Germany ratified the Council of Europe Criminal Law Convention on Corruption in 2017, it has not yet ratified the Civil Law Convention on Corruption.

Resources to Report Corruption

There is no central government anti-corruption agency in Germany. Federal states are responsible for fighting corruption.
Due to Germany’s federal state structure, original responsibility in the area of anti-corruption lies with the individual federal states. Further information, in particular contact persons for corruption prevention, can be found on the websites of state level law enforcement (police) or the ombudsmen of the cities, districts and municipalities.
These offices, special telephone numbers or web-based contact options also offer whistleblowers or interested citizens the opportunity to contact them anonymously in individual federal states.
(The Federal Ministry of the Interior’s website provides further information on corruption prevention regulations and integrity regulations at the federal level.)
Claimants can contact “watchdog” organizations such as Transparency International for more information:
Alexandra Herzog, Chair
Transparency International Germany
Alte Schönhauser Str. 44, 10119 Berlin
+49 30 549 898 0
office@transparency.de 
https://www.transparency.de/en/ 
The Federal Criminal Office publishes an annual report on corruption: “Bundeslagebild Korruption” – the latest one covers 2021.

Labor Relations

Germans consider the cooperation between labor unions and employer associations to be a fundamental principle of their social market economy and believe this collaboration has contributed to the country’s resilience during economic and financial crises. Insofar as job security for members is a core objective for German labor unions, unions often show restraint in collective bargaining in weak economic times and often can negotiate higher wages in strong economic conditions. In an international comparison, Germany is in the lower midrange with regards to strike numbers and intensity. All workers have the right to strike, except for civil servants (including teachers and police) and staff in sensitive or essential positions, such as members of the armed forces.
Germany’s constitution, federal legislation, and government regulations contain provisions designed to protect the right of employees to form and join independent unions of their choice. The overwhelming majority of unionized workers are members of one of the eight largest unions — largely grouped by industry or service sector — which are affiliates of the German Trade Union Confederation (Deutscher Gewerkschaftsbund, DGB). Several smaller unions exist outside the DGB. Overall trade union membership has, however, been in decline over the last several years. In 2022, total DGB union membership amounted to 5.6 million. IG Metall is the largest German labor union with 2.1 million members, followed by the influential service sector union Ver.di (1.9 million members).
The constitution and enabling legislation protect the right to collective bargaining, and agreements are legally binding on the parties. About half of non-self-employed workers are covered by a collective wage agreement, but the number is decreasing with fewer companies (especially in the eastern part of the country) willing to sign collective bargaining agreements.
By law, workers can elect a works council in any private company employing at least five people. The rights of the works council include the right to be informed, to be consulted, and to participate in company decisions. Works councils often help labor and management settle problems before they become disputes and disrupt work. In addition, “co-determination” laws give the workforce in medium-sized or large companies (corporations, limited liability companies, partnerships limited by shares, co-operatives, and mutual insurance companies) significant voting representation on the firms’ supervisory boards. This co-determination in the supervisory board extends to all company activities.
From 2010 to 2020, real wages grew yearly by 0.6 percent on average. As a result of the COVID-19 pandemic, real wages fell in 2020 by 1.1 percent over the previous year, ending a six-year period of real wage increases. Job losses and enrollment in the government’s temporary furlough program (at 70 percent of previous wage levels) were the drivers of this reduction. In 2022 employment picked up again and nominal wages increased by 3.5 percent. Inflation in 2022 of 6.9 percent resulted in another year of real wage reduction of 3.1 percent. High inflation and real income losses caused labor unions to seek wage agreements significantly above the long-time average. Especially in the service sector, double-digit wage demands led to unusually intense labor disputes in the spring of 2023.