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German Economy and Business Practices

Economy

Currency

The euro (1 EUR = 100 cents) is the legal tender for 321 million people in 18 European countries:

Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain.

Go to the European Central Bank for more information.

Exchange rates

1 EUR = 1.37 USD (January 2014)

1 USD = 0.73 EUR (January 2014)

Economic Data

Year

Average Unemployment rate

Annual Inflation rate (HICP)

2002

8.7%

1.4%

2003

9.8%

1.0%

2004

10.5%

1.8%

2005

11.3%

1.9%

2006

10.3%

1.8%

2007

8.7%

2.3%

2008

7.5%

2.8%

2009

7.8%

0.2%

2010

7.1%

1.2%

2011

5.9%

2.5%

2012

5.5%

2.1%

Source: Eurostat

Note: The unemployment rates of East and West Germany differ.

Please check the German Department of Labor for detailed information.

Year

GDP (billion EUR)

2002

2132.2

2003

2147.5

2004

2195.7

2005

2224.4

2006

2313.9

2007

2428.5

2008

2473.8

2009

2374.2

2010

2495.0

2011

2609.9

2012

2666.4

2013

2735.8

Source: Federal Statistical Office Germany

U.S. Exports and Imports to Germany

After Canada, Mexico, China, Japan, and the U.K., Germany is the sixth largest trading partner of the U.S.

U.S. trade in goods with Germany: 2000-2013

Note: All figures are in millions of U.S. Dollars on a nominal basis.

Year

Exports to Germany

Imports from Germany

Balance

2000

29,448.4

58,512.9

̶ 29,064.5

2001

29,995.4

59,076.6

̶ 29,081.2

2002

26,629.6

62,505.7

̶ 35,876.1

2003

28,831.9

68,112.7

̶ 39,280.8

2004

31,415.9

77,265.6

̶ 45,849.7

2005

34,183.7

84,750.9

̶ 50,567.2

2006

41,159.1

89,082.0

̶ 47,922.9

2007

49,419.7

94,164.1

̶ 44,744.4

2008

54,505.3

97,496.6

̶ 42,991.3

2009

43,306.3

71,498.2

̶ 28,191.9

2010

48,155.3

82,450.4

̶ 34,295.1

2011

49,146.8

98,687.9

̶ 49,541.1

2012

48,797.1

108,708.1

̶ 59,911.0

2013

43,807.4

105,109.2

̶ 61,301.8

Source: U.S. Census Bureau

Main Exports and Imports by Commodity with Germany 2010

Commodity

Imports from Germany

Exports to Germany

Apparel

USD 115.6 million

USD 142.3 million

Chemical goods

USD 7.1 billion

USD 7.2 billion

Electric Equipment

USD 9.5 billion

USD 11.4 billion

Beverages

USD 611.9 million

USD 426,.2 million

Machinery

USD 15.4 billion

USD 6.8 billion

Cars and car parts

USD 25.4 billion

USD 5 billion

German Business Practices

Business Hours

  • normal working hours: 9:00am – 5:00pm
  • retail opening hours: German states have different regulations. Opening hours vary. 24h shopping on Sundays is only available at certain gas stations and at other sites related to travel.

Labor

Wages and Productivity

When compared internationally, wages in Germany are among the highest in the European Union and worldwide. Average industry wages in 2005 were 27.9 EUR (Western Germany) respectively 17.4 EUR (Eastern Germany) per hour. Nonetheless, German labor is known to be productive and skilled. German quality is famous throughout the world.

Labor Law

Unions are powerful and large in Germany. Workers are protected by strong labor laws that provide them with many different rights. They are much more substantial than in the U.S. Here are some examples:

Ordinary dismissal of workers must be proceeded by notice, which depends on the duration of the time the employee was with the company. It may vary from 1-7 months. The employee may also challenge the dismissal in court.

The Mother Protection Law grants a mother a total of 36 months leave. Six weeks prior to the birth and eight weeks thereafter are on paid leave. The mother and the employer can agree on a parental leave (max. 36 months), after which the employer will provide her with the same job she had prior to the birth of the child.

Social Security and Health Care costs are equally split between the employee and the employer.

Average working hours are 37.5 hours/week and annual leave varies between 20 and 30 working days.

For additional information on labor in Germany please visit the Central Office of the Employment Agency.

Tax

  • value-added tax: 19%
  • reduced value-added tax (e.g. food and books): 7%
  • corporate income tax on distributed and undistributed income: 25%

If you are a foreign company looking to register for VAT in Germany, please contact the following institution:

Bundeszentralamt für Steuern
An der Küppe 1
D-53225 Bonn
phone: +49 (0) 228 406-0
fax: +49 (0) 228 406-2661
http://www.bzst.bund.de

eMail: poststelle@bff.bund.de

Depending on where you will carry out business in Germany, you will need to contact that local Finance office (Finanzamt). For all office listings please look at the following website: http://www.finanzamt.de/

If you are already registered for VAT in Germany and wish to reclaim VAT, please send an email to vatrefund@bff.bund.de

Legal

The Legal Guide to Germany
The project “The Legal Guide to Germany" is the expat's concise guide to overcoming officialdom in Germany:
http://www.lg2g.info