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  • www.pwc.de

    A guide covering everything you need to know about doing business inGermany from corporate and labour law to finance, regulatory matters and tax.

    January 2016

    Doing business and investing in Germany

  • Doing business and investing in Germany 3

    March 2016 PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprfungsgesellschaft. All rights reserved. In this document, PwC refers to PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprfungsgesellschaft, which is a member firm of PricewaterhouseCoopers International Limited (PwCIL). Each member firm of PwCIL is a separate and independent legal entity.

    PrefaceDoing business and investing in Germany

    By Andrew Miles

    January 2016, 104 pages, softcover

    This guide has been prepared for the assistance of those interested in doing business in Germany. It does not cover exhaustively the subjects it treats, but is intended to answer some of the important, broad questions that may arise. When specific problems occur in practice, it will often be necessary to refer to the laws, regulations and legal decisions of the country and to obtain appropriate professional advice.

    Whilst we have made every attempt to ensure the information contained in this guide is accurate, neither PwC nor the author can accept any responsibility for errors or omissions in the factual content.

    The material contained in this guide reflects the position on January 1, 2016.

    The latest annual PwC Global CEO survey of 1,400top managers from all over the world showed an alarming loss of confidence in future economic expansion. Only some 27% of respondents predicted worldwide growth in 2016, a fall from 37% a year earlier.

    By contrast 40% of respondents from Germany saw future worldwide economic development in a positive light. This considerably more optimistic view would seem to stem from a stable business background. That view is confirmed by the IMF in its growth prediction for Germany of 1.7% in both 2016 and 2017.

    This underlines again the value of the dependable markets, the reliable infrastructure and the economic well-being that Germany offers her businesses. Although she faces the same economic and political challenges as other developed countries, the investment climate remains positive and the economy strong. New investment opportunities continue to abound.

    This Guide to Doing Business and Investing in Germany is intended to be of interest to business owners and executives looking to enter the German market or to grow their German operations. It has chapters on the important topics common to all industries and thus discusses the economy generally, business regulation, the employment situation, corporate and legal forms, accounting and auditing and, last, not least, taxation. However, it cannot answer every specific question you may have, so please feel free to turn to your usual PwC contacts or one of our German Business Groups located in PwC offices around the world.

    On behalf of PwC Germany, I wish you every success in our country.

    Norbert Winkeljohann

    Prof. Dr. Norbert Winkeljohann

  • Doing business and investing in Germany 5

    www.pwc.de/en/standorte

    29PwC has 29 offices in Germany. Addresses and contact details can be found online:

    Frankfurt am Main

    Bielefeld

    Dsseldorf

    Essen

    Hanover

    Oldenburg

    Osnabrck

    Bremen

    Hamburg

    Kiel

    Schwerin

    Potsdam

    Magdeburg

    Erfurt Dresden

    Mainz

    Saar-brcken

    Stuttgart

    Munich

    Nuremberg

    Cologne

    SiegenKassel

    Freiburg

    Karlsruhe

    Leipzig

    Mannheim

    Duisburg

    Berlin

  • Doing business and investing in Germany 7

    http://www.pwc.de/de/internationale-maerkte/index.jhtml

    24PwC has 24 German Business Groups in over 80 countries worldwide. Contact details can be found online.

    India

    Southeast Asia

    China

    Japan

    South Korea

    Canada

    Brazil

    Mexico

    USA

    Central and Eastern Europe

    Southern Africa

    BelgiumDenmarkFranceItalyLuxembourg NetherlandsSpainSwedenSwitzerlandTurkeyUnited Kingdom

    Australia

    Middle East

  • Doing business and investing in Germany 98 Doing business and investing in Germany

    6.4 Shareholders, directors and officers .......................................................... 416.5 Corporate governance ...............................................................................426.6 Partnership limited by shares ....................................................................436.7 Partnerships ..............................................................................................436.8 European economic interest grouping .......................................................446.9 Branches of foreign companies ..................................................................446.10 Change of legal form ..................................................................................456.11 The European company (SE) .....................................................................456.12 Foreign legal forms ....................................................................................46

    7 Labour relations and social security ....................................... 477.1 Availability of labour .................................................................................487.2 Employment relations ................................................................................487.3 Workers councils and unions ....................................................................487.4 Wages and salary levels .............................................................................497.5 Fringe benefits ...........................................................................................497.6 Working hours and holidays ...................................................................... 517.7 Health and safety ....................................................................................... 517.8 Termination of employment ......................................................................527.9 Social security ...........................................................................................527.10 Working and residence permits for foreigners ...........................................53

    8 Audit requirements and accounting practices ........................ 558.1 Statutory requirements ..............................................................................568.2 Accounting principles ................................................................................ 578.3 Form and content of annual reports ........................................................... 578.4 Valuation ...................................................................................................588.4.1 Shareholders equity ..................................................................................588.4.2 Fixed assets ...............................................................................................588.4.3 Inventories ................................................................................................588.4.4 Accruals and provisions .............................................................................588.4.5 Payables and other liabilities ..................................................................... 598.4.6 Foreign currency balances ......................................................................... 598.4.7 Taxes ......................................................................................................... 598.4.8 Pensions ....................................................................................................608.4.9 Leasing ......................................................................................................608.5 Consolidated accounts ...............................................................................608.6 International Financial Reporting Standards ............................................. 618.7 Enforcement .............................................................................................. 618.8 Auditing profession and auditing standards ............................................... 61

    9 Tax system and administration ............................................... 639.1 Principal taxes ...........................................................................................649.2 Sources of tax law ......................................................................................659.3 Returns ......................................................................................................669.4 Payments ................................................................................................... 679.5 Audits ........................................................................................................ 679.6 Appeals ......................................................................................................689.7 Penalties ....................................................................................................689.8 Tax office rulings .......................................................................................699.9 Withholding taxes .....................................................................................699.10 International exchange of information ......................................................70

    Preface .................................................................................................. 3

    Contents ................................................................................................ 8

    1 Germany: a profile .........................