Germany is one of the founding members of the European Union and the Eurozone. It ranks 9th in the 2020 Global Innovations Index and 7th in the 2019 Global Competitiveness Index, both published by the World Economic Forum and IMD. It is Europe’s strongest and largest national market, the fourth largest in the world by nominal GDP, and the fifth largest in the world by GDP or PPP.
The country’s economy is based on the social market economy, which is highly diversified and places equal focus on services and industry. Its influence stretches throughout Europe and beyond – Germany is one of the largest exporters globally, recording exports of goods and services of over EUR 1,600 billion in 2019.
Geographically, Germany is ideally placed within the European continent and holds state-of-the-art logistics and communications networks. This includes a strong and world-renowned transportation infrastructure of airports, railways, ports, and highways that connects the country domestically and internationally.
Germany is one of the main gateways to European talent for companies expanding abroad and serves as a magnet for business ventures from the United States, Australia, and Asia. World-renowned companies such as Allianz, Diamler, BMW, SAP, and Volkswagen are headquartered in Germany. It is also the world’s top location for trade fairs.
Regarding production, Germany possesses the largest manufacturing economy in Europe. It also invests in a strong research and development infrastructure with practical industrial value, gaining a reputation as the bridge between current university insights and industry-specific improvements.
Germany also focuses on the future, embracing innovation, sustainability, and digitalisation. The EU Innovation Scoreboard (2021) ranks the country highly in human resources, information technology, research and development, and environmental sustainability.
Small and Medium-sized companies, referred to as the “Mittelstand“, primarily drive Germany’s economy. These 3.5 million SMEs account for over 99% of Germany’s businesses and contribute to half of the country’s GDP, providing almost 60% of the jobs.
German SMEs have long been celebrated for contributing to innovation and technology, locally and abroad. Recent studies commissioned by the Federal Ministry of Economic Affairs and Climate Action demonstrated that with a focus on adopting new trends such as digitalisation – and access to skilled labour despite potential shortages – SMEs could remain competitive in specialised market sectors, keeping Germany at the forefront of industry success worldwide.
Every year, over 300,000 new companies open up in Germany. The “GO! start-up” campaign aims to encourage more people into entrepreneurship – especially those underrepresented, such as women or migrants wanting to break into the start-up scene.
German SMEs have access to ample funding options, thanks partly to the government’s allocation of EUR 2 billion towards venture capital. This includes the ERP/EIF Growth Facility (€500 million), the Coparion Co-Investment Fund (€225 million), and an increase of up to €1.7 billion in volume for the ERP/EIF fund of Funds! In addition, measures are being taken by Germany to encourage a more favourable fiscal environment for investments and to facilitate young companies’ listing on the stock exchange – all crucial elements for SMEs to remain competitive today!
Germany (Federal Republic of Germany)
Mainland: CET (UTC+1/+2 with DST)
1 January – 31 December (calendar year)
National Minimum Wage (2023):
EUR 1, 584/month – EUR 19,020/year
Taxpayer Identification Number (TIN):
Steuer ID – Tax ID (Personal)
Steuernummer – Tax Number (Businesses)
Umsatzsteuer ID – VAT Number
Sozialverischerungsausweis – Social security ID
Main trading partners (2021):
Main Customers: the USA (8.9%), China (7.6%), France (7.4%), the Netherlands (6.6%), Poland (5.6%), and Italy (5.4%).
Main Suppliers: China (11.9%), the Netherlands (7.6%), the USA (6.1%), Poland (5.7%), Italy (5.4%), and France (5.2%).