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Doing business

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(Last updated: 24 Mar 2011)

Business opportunities

Austrade’s business development specialists have prepared a range of market profiles that offer potential to assist in your exporting investigations. Austrade’s in-market teams have identified opportunities for Australian exporters in various industries (see 'Profiled industries in this market' on the left side of this page).

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Business etiquette

Business tips

Germany is a free enterprise market where no business sectors exclusively dominated by the State. It is a cosmopolitan market where 22,000 foreign businesses are located including the 500 largest companies in the world.

Foreign companies employ 2.7 million people. Germany provides developed, sophisticated infrastructure to support business in the areas of logistics, telecommunications, qualified labour, research and development and access to markets.

Around two-thirds of the world’s key international trade fairs are held in Germany, and the country operates four of the five largest trade fairgrounds in the world.

German business people are experienced in conducting international business and receptive to well planned approaches, which demonstrate a potential commercial benefit to their companies. While broadly similar to Australian business practice the German approach has a higher emphasis on order, hierarchy and formality. A planned approach well in advance is highly recommended.

There are rules and established processes for all aspects of doing business - rights of residence and work, establishing a company, contract of employment, tax and legal system, etc.

In business there are equally some established protocols:

  • German people are conscious of hierarchy and it is expected that you will deal with appropriate levels of seniority.
  • Provide at least six weeks notice for senior executive level meetings.
  • Frame the meeting with an agenda, short personal bio or CV, company profile and product literature.
  • English is widely spoken but it is courteous to check and establish whether English will be acceptable. Arrange translation as appropriate. In any case, speak more deliberately and slowly recognising English is most likely a second language to your host.
  • Understand your contact – company characteristics, strategic directions, needs.
  • It is usual that company representatives address each other by their surname. Wait to be invited to use first names.
  • Business dress is suit and tie. ‘Casual’ dress would assume a jacket and tie.
  • Business cards are used in a similar way to Australia.
  • Punctuality is very important. If you are running late for a meeting, call ahead to advise the change and give as much notice as possible to that change.

The peak summer holiday months of July and August are difficult to arrange meetings especially a program with multiple contacts as school holidays vary across Germany and extended periods of leave at this time are common. In addition, many companies shut down over the Christmas and New Year period between 24 December and 2 January.

Please also note: Bribery of foreign public officials is a crime. Australian individuals and companies can be prosecuted in Australia for bribing foreign officials when overseas. For more information, go to the Attorney General's Department on foreign bribery.

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Tariffs and non-tariff barriers

Tariff

Germany is a member of the European Union (EU). Preferences are given to EU associate members, developing countries and EFTA members.

The European Customs Tariff (TARIC, Tarif intégré des Communautés européennes) applies for goods originating from outside the Single European Market, since customs tariffs have been harmonised within the Union. Goods must be declared for customs clearance, when they are brought to the European Union.

In general, customs duties in Europe are calculated ad-valorem, meaning that they are derived from the value of the imported goods. This value – the customs value – is equivalent to the sales price; it is adjusted by adding the costs of transport, insurance and loading in case they are not included in the sales prices (CIF-price), which is to be proven by sales documents.

Vice versa, costs of transportation within the Single European Market can be deducted, if they have been included in the sales price beforehand, which must be likewise certified.

An introduction to the Common Customs Tariff is available from the European Commission, which also provides the up-to-date TARIC database. A Common External Tariff (CET) is applicable to other countries (including Australia). You can find customs duties for specific merchandise and/or search by specifying a TARIC code.

Some specific duties are levied, usually on net metric weight. Levies, established under the EC Common Agricultural Policy (CAP), are commonly applied to imports of agricultural products. The value of the levy may be expressed in ad valorem, specific or composite terms.

Goods sold to Germany from a member state of the European Union are not subject to customs duties. They are free to circulate within the Single European Market. The free circulation of goods in the Single European Market means that they can be imported and exported without any customs clearance between member states.

All industrial imports are subject to an ‘import sales tax’ of 19 per cent. It is equivalent to the value-added tax (VAT) which is levied on all domestically produced items, thus placing the same tax burden on imported and domestic products. The import turnover tax is charged on the duty paid value of the import article plus customs duty. A discounted tax of seven per cent is levied on food products, books, newspapers and pieces of art.

The Federal Ministry is responsible for import and customer regulations:

Bundesministerium der Finanzen
Wilhelmstraße 97
10117 Berlin
Postal address: 11016 Berlin
Tel.: +49 30 18 682 - 0
Fax: +49 30 18 682 - 3260

However, specific questions concerning customs matters may be directed to:

The Customs' Information and Knowledge Management
(Informations- und Wissensmanagement Zoll)
Carusufer 3-5
01099 Dresden
Tel: +49 351 44 834 530
Fax: +49 351 44 834 590
Email: enquiries.english@zoll.de

For legal reasons, all information given is always non-binding and relates exclusively to the customs regulations that apply in Germany.

Non-tariff barriers

Import restrictions

Prohibitions and restrictions are applicable in the following fields:

It should also be remembered that there are prohibitions and restrictions to moving goods within the European Union.

Certain items require specific import licences, such as:

  • A range of agricultural products
  • Certain foodstuffs
  • Textiles (excluding goods originating out of Australia)

Some imports are subject to quantitative restrictions (eg. meat) and/or the requirement for specific import licenses or confirmation that the manufacturer is licensed to export from the country of origin (eg. apparel manufactured in developing countries). Specific import regulations may also apply to products under monopoly control (eg. medicines).

Exchange control is the responsibility of the European Central Bank and is administered by authorised banks.

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Product certification, labelling and packaging

Product certification

German Institute of Standardisation

Standards developed by the German Institute of Standardization (Deutsches Institut für Normung – DIN) are similar in nature to those of the Australian equivalent, Standards Australia. DIN standards while widely accepted in Germany are not legally binding themselves. DIN coordinates its activities with, and represents Germany in international bodies of standardisation such as the European Committee for Standardization (CEN) and International Organization for Standardization (ISO). More information and specific standards are available from the DIN Institute through its online database: www.din.de/cmd?lang=en&level=tplhome&languageid=en

Most of the products that circulate in the Single European Market must be labeled with a CE-marking. CE means "Conformité Européenne". The mark indicates that the product complies with European safety standards.

Producers cannot afford to export products into the EU, that are governed by the respective EU directives and which do not bear the CE mark, as they may be held liable for damages resulting from failures of the products.

A new legal framework involving the modernisation of the approach for marketing of products was adopted by the European Council on 23rd June 2008. This broad package of measures has the objective of removing the remaining obstacles to free circulation of products by reinforcing the role and credibility of CE marking. The full framework can be accessed at: http://ec.europa.eu/enterprise/newapproach/index_en.htm

The process and costs associated with achieving CE certification vary greatly depending on the product in question. It is recommended that exporters seek expert advice in supporting this process. Initial contact with Austrade can help determine next steps.

Labelling and marking

EU harmonised regulations on product contents, labelling and advertising apply to all types of foodstuffs and beverages. Additives, colouring and artificial sweeteners are highly regulated. Many such ingredients are approved only for specific purposes and foods.

The field of food labelling is complex and specific guidance should be sought for any new product being considered for export to the EU or to Germany. A useful initial overview of EU requirements can be found on the Europa website.

German importers are required to inform foreign exporters of specific government marking and labelling requirements. As labelling must correspond with EU regulations it is recommended that this be clarified in each individual case.

No German federal government ministry directly provides food label registration. Exporters must rely on the private food laboratories for food label review. However, the Bundesinstitut für Risikobewertung (BfR) or Federal Institute for Risk Assessment is a public agency whose remit is to strengthen consumer health protection. BfR has 16 National Reference Laboratories (NRLs) in the fields of food safety and food hygiene. In the field of analytical-diagnostic methods the National Reference Laboratories play a link between the EU Community Reference Laboratories and the monitoring laboratories of the federal states involved in enforcement activities. The BfR can play a role in recommending how to obtain the necessary testing, approval and/or labelling compliance for your product. A useful initial overview of BfR services can be found at www.bfr.bund.de/cd/template/index_en

In addition, a range of commercial laboratories exist that provide this service.

In general, goods must be marked or labelled to show the:

  • manufacturer's name
  • content
  • quantity in metric units
  • country of origin

Multi-language labels are allowed as long as German is included.

Labelling on pre-packed foods must indicate in German the following:

  • Common product name or trade name
  • Ingredients and food additives in descending order of weight or volume at the time of use
  • Uncoded minimum shelf-life date
  • The net weight or volume in metric units
  • Name and address of manufacturer, packer, importer or distributor within the EU
  • Coded lot identification

The labelling must correspond with EU regulations and has to be clarified in each individual case.

Special labelling requirements may apply to food or beverage products which make additional claims:

  • The Nutritive Value Labelling Law is voluntary but establishes certain conditions the exporter must fulfil if information on nutritive value is on the label.
  • The Dietetic Food Law defines dietetic properties in foods, which must vary substantially from normal foods. It is recommended that exporters consult with a German food laboratory before making any dietary claims for their products.
  • Foods that are vitamin-enriched require labelling in the list of ingredients or next to the trade name of the product that identifies type of vitamin and quantity per 100 grams of product. Vitamins A and D, as well as their derivatives, are restricted for use in certain food preparations and must be listed in the additive list. Also, vitamins added for technical purposes (eg. Vitamin C might be added for its antioxidant properties) must be listed as additives.

Pesticide Residue Laws

The German Pesticide Residue Law sets maximum tolerances for many pesticides in foods derived from both plants and animals. It establishes import tolerances for many pesticides not approved for use in Germany. Within the EU, pesticide tolerance levels for only a quarter of pesticide residues have been harmonised.

No irradiated foods are allowed in Germany, so cross them off your export list.

Novel food

In the EU and Germany, the term 'novel food' is applied to foods and food ingredients that have not hitherto been used for human consumption to a significant degree within the EU and are new to market (effectively not prior to 1997).

Novel Food regulations apply to the following categories of food and food ingredients:

  • Containing or consisting of genetically modified organisms.
  • Produced from, but not containing, genetically modified organisms.
  • With a new or intentionally modified primary molecular structure.
  • Consisting of or isolated from micro-organisms, fungi or algae.
  • Consisting of or isolated from plants or isolated from animals; except having been obtained by traditional propagating or breeding practices and having a history of safe food use (in the EU).
  • To which has been applied a production process that gives rise to significant changes in composition or structure or which affect the nutritional value, metabolism or level of undesirable substances in those foods or food ingredients.

Germany relies on the EU Novel Foods Regulation as the guide for approving foods in this category. A useful initial overview of EU requirements in this area isa vailable.

Packaging

The German Consumer Packaging Law identifies mandatory and non-mandatory standard container sizes for certain products. Most liquids must be sold in mandatory container sizes. Other products that are packaged in non-mandatory but privileged standard container sizes do not require price-per-unit information. If a product is not sold in the privileged size container, the box must show a per unit price.

If a package contains less than 250gm or 250ml, a unit price must be shown for the 100gm or 100ml unit.

‘Green Dot’ a must for packaging

Germany’s increasing waste disposal problems led to a cooperative effort for the collection and recycling of packaging materials. The Duales System Deutschland (DSD) oversees recycling and disposal in Germany. It authorises use of the green dot symbol on packaging for products sold in Germany, which means the packaging has met certain requirements that make its disposal easier.

The symbol is not legally required, but marketing a product without it is almost impossible. The importer pays a license fee (amount depends on type and amount of packaging) to the DSD for use of the green dot.

Goods should be securely packed, having due regard to the nature of the goods, means of transport and likely climatic conditions during transit and delivery. Outer containers should bear the consignee's mark and port mark and be numbered (to accord with packing list) unless the contents can be otherwise readily identified.

Many countries, particularly the members of the European Union (EU), have passed packaging and recycling laws in the past 10 years. These laws are meant to make packaging materials environmentally friendly. US exporters need to ensure that their packaging materials are compliant with their importer’s domestic regulations.

German packaging regulations require suppliers of goods to arrange for the retrieval and recycling of transport and sales packaging. An environmental mark, eg. the 'Green Spot' (der grune punkt) informs the consumer that the packaging can be recycled.

Exporters to the Federal Republic of Germany should contact Duales System Deutschland, Cologne regarding this measure:

Corporate Communications and Marketing
Duales System
51170 Cologne (Germany)
Tel: +49 2203 937 260/261
Fax: +49 2203 937 191

Special certificates

Fresh carcass meat, offal and livestock require sanitary certificates issued by the approved authority in the country of origin. In Australia this is usually the Australian Quarantine and Inspection Service (AQIS) and the Department of Agriculture, Fisheries and Forestry-Australia (AFFA), or the relevant state department of agriculture.

Fruit and plants require phytosanitary certificates issued by the approved authority in the country of origin.

A certificate of age, authenticated by an approved authority in the country of origin, may be required for alcoholic beverages.

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Documentary requirements

Pro forma invoice

This may occasionally be requested by the importer. A minimum of two copies is required.

Commercial invoice

No prescribed form, and a minimum of two copies is required. The invoice must include:

  • The name and address of both buyer and seller
  • Method of packing
  • Marks and numbers
  • Number of containers
  • Description of the merchandise (including HS description)
  • Net and gross weight
  • FOB value (Incoterms 1990)
  • Freight
  • Insurance and other charges

Bill of lading/airway bill

No special requirements. To Order bills are acceptable.

Certificate of origin

This is required for certain specified items and should be issued by an approved authority (see 'Guidelines', section 2.3).

Packing list

Not compulsory but facilitates clearance.

Public health requirements

Livestock (other than horses, dogs and cats), foods, animal products, plants and plant products are subject to detailed regulations and controls, and imports must be accompanied by special certificates (see 'Special certificates'). Specific requirements should be checked with the importer.

Imports of drugs and pharmaceuticals are strictly controlled.

Insecticides and other potentially dangerous chemical substances for general sale are restricted by laws. The substances have to be approved and registered with German Government agencies after testing to determine whether the product is safe for normal trading.

EU legislation for imports of meat requires sanitary certificates from the Australian Quarantine and Inspection Service (AQIS) and the Department of Agriculture, Fisheries and Forestry-Australia (AFFA). In this regard qualified advice should be sought.

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Setting up in Germany

Finding the right partner

Trade exhibitions are an important marketing tool for Australian companies doing business with Germany. It is a traditional way of doing business in Europe and helps overcome the decentralised nature of the market by allowing Australian companies to meet buyers and distributors.

Market entry is subject to EU tariffs and regulations. However, regulations for each individual product should be checked prior to market entry.

As the largest and most sophisticated market in Europe, most sectors in Germany have well established distribution channels and Australian exporters will expect to have to work through an importer/distributor or an agent.

In-market representation

Germany’s international standing, political strategies, and economic framework provide ideal conditions for foreign investors.

Any entrepreneur who wishes to start a business in Germany may do so – there are generally no restrictions limiting the establishment of new companies. Nevertheless, establishing a business in Germany requires a sequence of several specific steps from choosing the appropriate legal form for the business to entry in the trade register.

Irrespective of the legal structure selected, a business must be reported to the competent Trade Licensing Office (in the place where the company is to be based). Many towns and municipalities require that a report be filed in person. As part of e-government initiatives, larger towns offer quick business registration by Internet. An useful overview can be found at www.foreign-direct-investment.de

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Taxation

Levels of income tax are high and a Value Added Tax (VAT) applies in Germany – the general rate is 19 per cent and the reduced rate, which applies to a limited range of goods, mainly primary products (eg. books and food), is seven per cent.  Excise duties are levied on a small range of items.

For imported products there exists a levy of an import VAT (import turnover tax) from goods arriving from outside the EU, which is equivalent to the VAT tax. The import VAT is charged in addition to the normal import duty rate of a product. The rate of the normal import duty depends on the category of the product, which is listed in the tariff schedule of the German custom office.

In compliance with the CAP of the EU, import levies can be imposed in addition to the customs duties on grains, dairy produce and sugar products to bring their subsequent pricing as imported goods up to pre-determined minimum levels.

Visit www.zoll.de/english_version and www.ec.europa.eu/taxation_customs/dds/tarhome_en.htm for further information.

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From Spiegel Online

Bilateral agreements

Australia has social security agreements with several countries that address the issue of 'double super coverage' for employees sent to work overseas. To take advantage of these agreements, Australian employers sending employees overseas to work must apply to the Tax Office for a Certificate of coverage.

For more details, please visit the Australian Taxation Office website.

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OECD Guidelines for Multinational Enterprises

Multinational Enterprises should be aware of the OECD Guidelines for Multinational Enterprises that provide voluntary principles and standards for responsible business behaviour in a variety of areas, consistent with applicable domestic laws. These Guidelines are endorsed and promoted by the Australian Government. For more information, go to the AusNCP website.

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