Don't Count Those Minuspunkte: Why Costs and Taxes Abroad Make Germany a Hot Spot
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Foreign connections hold potential advantages for Germany's standing. - Foreign assets present substantial benefits for Germany
Pricey and heavily regulated, yet economically appealing - that's how foreign corporations view Germany with a blend of sentiment, as revealed by a study by Germany Trade & Invest (GTAI) obtained by the German Press Agency. A whopping 1,800 companies from the UK, France, the USA, Japan, and South Korea participated in this research.
"Germany is overregulated, and the tax and levy burden is too high," GTAI sums up the companies' views. "However, Germany is an economically stable and extensive market that offers tremendous potential." According to these companies, the qualified workforce, innovative strength, and reliable legal framework are also attractive factors.
Ultimately, around 60% of the respondents acknowledge that Germany boasts good infrastructure, excellent scientific institutions, and ideal production conditions.
Germany's Image: Disciplined, ambitious, and automotive
The study also reveals common misconceptions about Germany and its virtues abroad. When thinking of Germany, economic resilience and potential top the list, followed by innovative strength, a talented workforce, and work ethic. Many foreign managers also think of the difficult German language, ambition and quality, and the automotive industry.
The analysis focuses on managers responsible for expansion decisions, according to Julia Braune, CEO of GTAI.
Language Barrier as a Hurdle
The location of Germany is often sharply criticized by economic associations. A survey by the Ifo Institute indicates that German economic experts place Germany in the European midfield. Almost 80% believe that Germany has become less attractive over the past ten years.
In the GTAI survey, the response is divided: Economic stability and potential are the most frequently cited strengths (14%), followed by qualified workers (10%), supply chains (10%), innovative strength (8%), and advantageous geographical location (7%).
Companies mentioned high operating and wage costs (14%), language and cultural differences (9%), overregulation (8%), and high tax and levy burden (7%) as the key weaknesses.
- Crisis-Resistant Germany
- Attractive Investment Destination
- Germany Trade & Invest (GTAI)
- United Kingdom
- France
- USA
- Japan
- South Korea
- Energy Transition
- Ifo Institute
Bonus Facts:
- This study by Germany Trade & Invest (GTAI) highlights that foreign companies perceive Germany as a crisis-resistant and attractive location for investment. Germany's stability and significance as a large market are key draws for both large corporations and small and medium-sized enterprises (SMEs)[1][2]. In 2024, the volume of international business projects in Germany reached EUR 23.2 billion, which is the third-highest amount ever recorded and well above pre-Covid levels[1][2]. despite global economic challenges, foreign companies continue to expand in Germany, underscoring its appeal as a business destination[1][2]. However, external factors like global economic uncertainty and trade policy uncertainties, particularly from the U.S., might influence long-term perceptions[5].
- The study by Germany Trade & Invest (GTAI) reveals that many foreign companies, including those from EC countries like the United Kingdom, France, the USA, Japan, and South Korea, view Germany as a crisis-resistant and attractive investment destination, due to its qualified workforce, innovative strength, and reliable legal framework.
- Despite perceiving Germany as having high operating and wage costs, language and cultural differences, overregulation, and a high tax and levy burden, these companies acknowledge Germany as an attractive destination for business, with 60% acknowledging its good infrastructure, scientific institutions, and production conditions.
