Germany

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Business Environment

Business Practices

General information: German Business Etiquette
German Business Portal
Opening hours and days: Saturday and Sunday are not working days. On Friday afternoons, companies often close about 3 to 4 pm.

Public holidays

New Year's Day	1st January
Good Friday	March or April
Easter Monday	March or April
Labor Day	1st May
Ascension	the sixth Thursday after Easter
Whit Monday	the seventh Monday after Easter
German Unification Day	3 October
1st day of Christmas	25 December
2nd day of Christmas	26 December
Epiphany (Bade-Wurtemberg, Bavaria and Saxony-Anhalt)	6 January
Corpus Christi (Bade-Wurtemberg, Bavaria, Hesse, North Rhine Westphalia, Rhineland Palatinate, Saarland and Thuringe in places where the majority of the population is Catholic)	sixty days after Easter
Assumption (Bavaria (in places where the majority of the population is Catholic) and Saarland)	15 August
Reformation Day (Brandenburg, Mecklenburg-Western-Pomerania, Saxony-Anhalt, Saxony, Thuringe)	31 October
All Saints (Bade-Wurtemberg, Bavaria, North Rhine Westphalia, Rhineland Palatinate, Saarland)	1st November
Day of fasting and prayer (Saxony)	November

Periods when companies usually close

Christmas holidays	from the end of December to the beginning of January
Easter holidays	from Good Friday to Easter Monday

Accounting Rules

Tax year: The tax year begins on 1 January and finishes on 31 December of the same year.
Accounting standards: Accounting priciples and regulations in Germany are in the "German Accounting Standards" - GAS (Deutsche Rechnungslegungs Standards - DRS) which are published by the German standardization bureau: the Deutsches Rechnungslegungs Standards Committee (DRSC). There is no compulsory official accounting plan in Germany. It is up to each company to choose the form, the language and the currency.
Accounting regulation bodies: DRSC
Accounting reports: The preparation of the annual accounts must take place less than three months after the end of the financial year for medium and large companies, and less than six months later for small companies.

Unlimited liability companies and partial liability companies (Einzelkaufleute, OHG, KG) must draw up the following accounting documents:
- a balance sheet (Bilanz) in the format decreed by the 4th European Directive of 1978, adapted to German law in 1985;
- a profit and loss account (Gewinnund Verlustrechnung).
Limited liability companies (Gmbh and AG) must add to the two documents above:
- notes to the accounts (Anhang);
- an annual report (Lagebericht).
The financial flow table or cash flow table is not obligatory, except for companies listed on the stock exchange.

European companies listed on the stock exchange must establish their annual consolidated accounts on the basis of the IAS/IFRS standards.
Publication requirements: The obligations of companies relative to the reporting of their accounts depend on their legal form: small company, medium company and large company (defined according to the total of the balance sheet, the net turnover and the members of staff employed).

Limited liability companies (Gmbh et AG), with the exception of small companies and groups of companies, must publish annual accounts and have them controlled by an outside auditor. On the other hand, unlimited liability companies (except KGaA) have no obligation to publish their accounts nor to have them audited.
Professional accountancy bodies: WPK - Wirtschaftsprüferkammer
IDW - Institut der Wirtschaftsprüfer
Certification and auditing: Price Waterhouse Coopers
Ernst & Young
KPMG
Deloitte & Touche
Accounting news: International Accounting News

Tax Rates

Consumption taxes

Nature of the tax: Value Added Tax (VAT) called Umsatzsteuer (USt)
Tax rate: 19% (1st January 2009).
Reduced tax rate: A reduced rate of 7% is applied to food, public transport, books and magazines and other products.
No rate is applied to exports.
Other consumption taxes: Company expenses are also subject to VAT (Vorsteuerabzug) at the rate of 19%. For more information refer to the German investement promotion agency.

Corporate taxes

Company tax: The standard rate is 15%.
The effective corporate tax rate including trade tax and solidarity tax (5.5%) is about 30-33%.
Tax rate for foreign companies: Company income is taxed at the Federal, Lander and Municipal levels.
Company income and expenditure is taxed at the rate of 19%.
Capital gains taxation: For capital gains on asset disposal, there is a single tax rate of 15% (+ a surcharge of 5.5%).
Capital gains from share transfer in resident and non-resident subsidiaries are exempt from corporate tax up to 95%, whatever the stock and the length of time it has been held.
Main allowable deductions and tax credit: Companies can carry forward their former loss limited to € 511500. Furthermore, they can carry forward their loss on the payment of interests which is deductible up to 30% of the EBITDA (Profits before interest, tax, depreciation and amortization).
Other corporate taxes: Additionally, federal, lader and municipal taxes vary from one municipality to the other.

Individual taxes

Tax rate

From EUR 0 to 7,834	0%
From EUR 7,835 to 52,552	14%
From EUR 52,553 to 250,400	42%
Beyond EUR 250,400	45%
A surcharge must be added ; it concerns a solidarity contribution.	5.5% of the amount of the taxable income

Allowable deductions and tax credit: Insurance bonuses, education and training expenses, retirement expenses, alimony, donations and expenses related to disability.
Special expatriate tax regime: Germany has signed avoidance of double taxation agreements. For more information refer to the Ministry of Finance (German only).

Double taxation treaties

Countries with whom a double taxation treaty have been signed: See the double Taxation Treaties signed by Germany
Whithholding taxes: Dividends: 20%, Interest: 0%, Royalties: 20%

Sources of fiscal information

Tax Authorities: The tax department
The Federal Finance Bureau
Other domestic resources: Tax information portal

Intellectual Property

National organizations: The organization responsible for the protection of intellectual property in Germany is the Deutsches Patent- und Markenamt (DPMA).
Regional organizations: For the protection of patents: The European Patent Office.
Governing trade marks, designs and models: The Office for Harmonization in the Internal Market.
International membership: Member of the WIPO
Signatory to the Paris Convention for the Protection of Intellectual Property
Membership to the TRIPS agreement - Trade-Related Aspects of Intellectual Property Rights (TRIPS)

National regulation and international agreements

Type of property and law	Validity	International agreements signed
Patent PatAnwO (Patent Anwalts Ordnung) 1966	Initial 3 year period of validity	Patent Cooperation Treaty (PCT) Strasbourg agreement concerning the International Patent Classification
Trademark MarkenG 1995	10 year period of validity	Trademark law treaty Nice agreement Protocol relating to the Madrid Agreement
Design WIPO
Copyright Copyright	70 years after the death of the author.	Berne convention Convention for the Protection of Producers of Phonograms against unauthorized duplication of their phonograms Rome convention for the protection of performers, producers of phonograms and Broadcasting organizations
Industrial Models WIPO	25 years

Legal Framework

Independence of justice: Judicial power in Germany is independent.
Equal treatment of nationals and foreigners: Germany is a constitutional State. Foreign nationals can always benefit from the same treatment as that reserved for citizens in legal matters.
The language of justice: The legal language is German.
Recourse to an interpreter: Possible
Sources of the law and legal similarities: The main source of the law is the constitution of May 1949 known as the fundamental law which has also become the constitution of reunified Germany. The country's judicial system is based on a system of civil law bringing together indigenous concepts and judicial revisions of different legislative acts by the Federal Constitutional Court. Germany has not accepted the obligatory jurisdiction of the ICJ. As it is part of the European Union, its national law is bound to submit to the conditions of Community legislation.
Checking national laws online: German Law Journal
Bundesrecht.de
German Official Gazette
German Official Gazette via Makrolog.de
Ministry of Justice Database
Juris
Deutsche Anwalt Portal

Standards

National standards organizations: German Institute for Standardization
DKE German Commission for Electrical, Electronic & Information Technologies of DIN and VDE
Association for Electrical, Electronic &Information Technologies
Integration in the international standards network: At the European level:
- CEN, European Committee for Standardization
- CENELEC, European Committee for Electrotechnical Standardization
- European Telecommunications Standards Institute (ETSI)

At the International level:
- International Standards organization (ISO)
- International Electrotechnical Commission (IEC)
- International Telecommunication Union (ITU)
Classification of standards: CE, DIN, ISO
Online consultation of standards: Beuth

The on-line catalog of European standards

The ISO catalog

The IEC catalog
Certification organizations: German Institute for Standardization
ISO International Organization for Standardization

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