Exporting to Germany
Strong trade partnership
Germany is the second largest export market for the UK and accounted for more than 10% of all UK trade in the 4 quarters to the end of Q3 2018. During that period, total trade between the UK and Germany was worth £132 billion.
Digital industry and economy
There is demand in areas of UK strength such as big data, artificial intelligence, cyber security and the internet of things.
Strong framework for investment
Germany offers competitive tax regulations, investment incentives and a secure, highly developed political and economic framework. This is supported by excellent infrastructure, a highly qualified workforce and legal system that protects property and individual rights.
Ease of doing business
24th
out of 190 countries, World Bank 2019
Currency
Euro
Business languages
German
You may need a translator
GDP per capita
$48,264
IMF, UK is $42,558
Economic growth
1.5%
IMF, 2018
Time zone
GMT +1
Opportunities for exporters
The digitalisation of Germany’s industry and economy will impact all sectors and enhance opportunities associated with business models, manufacturing processes, digital marketplaces and supply chains.
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Technology
The German economy is characterised by its small and medium sized enterprises (SMEs), which offer many opportunities for UK information technology and expertise.
Investment incentives
Germany offers investment incentives ranging from cash incentives for the reimbursement of direct investment costs to incentives for labour and research and development.
SME sector
Germany has a very high performing SME sector, called the ‘Mittelstand’. These companies are world leading in their fields but often need support with the challenges of digitalisation.
Drive to improve efficiency
German manufacturing companies are keen to make their factories more efficient. There are opportunities for UK companies specialising in data and technology to help improve the output of German plants.
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Automotive
Germany is one of Europe’s leading automotive manufacturers and exported $257.3 billion worth of vehicles in 2017. The sector’s importance to German manufacturing means that disruption in the industry represents nothing less than a national challenge. This challenge presents opportunities for UK companies.
Investment in future mobility
German automotive companies are investing heavily in future mobility. Volkswagen alone is investing €30 billion until 2023 with the aim of transforming the business from a manufacturer to a future mobility service provider. Other carmakers are doing the same. They need new solutions to achieve this, presenting an opportunity for UK companies.
Demand for UK skills
The biggest challenge German automotive companies are facing is the need for new software and engineering talent. The UK's reputation for high-end engineering and software skills is recognised in Germany. Automotive companies are also more open than ever to engaging in partnerships, rather than direct procurement.
Ties with the UK
The ties between the German and UK automotive industries run deep. Leading global players based in Germany have significant existing manufacturing ties to the UK, including VW, BMW, Ford, Daimler AG, Opel and Bosch. The UK automotive industry is close to home for German carmakers and respected for its business practice and innovation.
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Health and life sciences
Germany is at the centre of Europe and the forefront of healthcare innovation. A sophisticated and demanding market, the opportunities for companies providing innovative products and services is substantial.
Market size
Germany offers one of Europe’s largest markets for healthcare and life sciences products, with health expenditure accounting for more than a 10th of GDP in 2017. High market demand and Germany’s strategic location make it a preferred choice for many international healthcare and life sciences companies preparing to expand.
Health technology
An increasing demand for healthcare services in Germany, combined with widespread digitisation and growing awareness of the importance of health and fitness, are paving the way for digital solutions in healthcare. Germany is also a world leader in medical technology and biotechnology, offering considerable opportunities for UK companies.
Pharmaceuticals
Germany presents significant opportunities in high quality pharmaceutical research, production and distribution. The country can offer unique benefits to UK companies in the pharmaceuticals sector, including direct access to internationally renowned scientists, outstanding research units, and major international markets.
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Food and drink
German imports of UK food and drink were worth £1.4 billion in 2017. There are significant growth opportunities in meat and dairy products, alcohol, biscuits, confectionery, snacks and international products produced in the UK.
Growth in the online market
The German food and drink industry is highly competitive, but until now has also been relatively conservative in its operating models. The introduction of new technology and digitalisation has helped to change this and resulted in the number of imports from the UK increasing.
Increasing demand for goods from other countries
The German public is becoming more open to new tastes and flavours. Food and drink imports from the UK remain concentrated at the medium to high end of the market, but interest is growing steadily, enabling the range of products to increase.
Opportunities for specialist sectors
Specialist sectors such as vegan foods are becoming increasingly popular in Germany.
Doing business in Germany
German firms are often family owned and value personal relationships highly. As well as best price, they’ll look for long-term shared vision. Some also prefer to buy locally so you should be clear on what’s unique about your product or service.
Tax and customs
The UK and Germany have signed a double taxation agreement, meaning the same income is not taxed twice. Germany does not have a nationwide tax rate for companies.
VAT
The standard rate of VAT in Germany is 19%. Convenience goods and day-to-day services are charged at 7%. Some services including banking, healthcare and non-profit work are VAT exempt. Goods exported from the UK to Germany are zero-rated if your customer provides their VAT registration number.
Regulations
Trade and commerce laws in Germany are based on EU legislation. The regulatory environment in Germany is very strong. You should make due diligence checks before going ahead with any investment. This is particularly relevant for artisans or business connected with the construction industry.
Packaging and labelling
Packaging is a strong influence on how German consumers choose products. It’s worth carrying out research to ensure that packaging conforms to German tastes. EU standards apply to packaging. For more information see the EU trade helpdesk. Labelling should be translated into German. Certain products, such as food and textiles, have specific labelling requirements.
Protecting your business
Payment terms
Standard payment terms for business-to-business transactions in Germany and the EU are 60 calendar days and 30 calendar days for public authorities. You can claim late payment interest when terms are not met.
Next steps
DIT can advise you on doing business abroad, and help put you in touch with other people who can help such as lawyers and distributors.
