Germany-Business Environment

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Published: 06 Oct 2008 17:49:53 PST

Standards

Domestic framework and international association

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)

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.
Having 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.

Intellectual Property

Domestic network and international agreements: The organization responsible for the protection of intellectual property in Germany is the Deutsches Patent- und Markenamt (DPMA).

Texts currently applying to patents/brands

Type	Text	Date entered into law	Period of validity	Remarks
Patent	PatAnwO	1966	Initial period of validity of 3 years	Extension of period 20 years in the term of initial period

Tax rates

Consumption taxes

Tax rate: 19% since 1 January 2007.
Reduced tax rate: A reduced rate of 7% is applied to food, public transport, books and magazines and other products.
A rate of 0% is applied to exports.
Other consumption taxes

Corporate taxes

Tax rate for resident companies: 25% for profits put in reserve as well as for reinvested profits + solidarity contribution (Solidaritätszuschlag : 5.5% of the amount of corporate tax due). The true rate of corporate tax is 26.37%.
Tax rate on long-term capital gains: For capital gains on asset disposal, there is a single tax rate of 25% (+ a surtax 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.
System governing groups of companies and dividends paid by subsidiaries to their parent companies: Dividends paid to non-residents companies:
Withholding tax rate of 20% (+ a surtax of 5.5%)
Exemption within the context of international conventions.
Dividends paid to resident companies:
Withholding tax rate of 0%.
Tax rate on branches: A non-resident corporation, whose corporate seat and place of management are located outside Germany, is subject to a corporate branch tax at a rate of 25% (+ a surtax of 5.5%).

Individual taxes

Tax rate: from 0 to 42%
Allowable deductions and tax credit

Double taxation treaties

Countries with whom a double taxation treaty have been signed

Sources of fiscal information

Tax Authorities: The tax department

Accounting rules

Tax year

The tax year begins on 1 January and finishes on 31 December of the same year.

Accounting standards

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.

Accounting reports

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.

Accountancy profession

Certification and auditing