Germany: Investing
In this page: FDI in Figures | What to consider if you invest in Germany | Protection of Foreign Investment | Procedures Relative to Foreign Investment | Office Real Estate and Land Ownership | Investment Aid | Investment Opportunities | Sectors Where Investment Opportunities Are Fewer | Finding Assistance For Further Information
FDI in Figures
Germany is considered an attractive country for foreign direct investment. According to the 2024 World Investment Report by UNCTAD, FDI inflows into Germany totalled USD 36.7 billion, up by 33.8% year on year but still below the levels recorded before the pandemic. In the same year, the stock of FDI increased slightly to over USD 1.12 trillion. The country has traditionally been a key investor: Germany's outward investment position stood at USD 2.17 billion at the end of 2023. According to data from the national Trade and Investment Agency (GTAI), in 2023, Germany's federal states recorded 1,759 FDI projects, including greenfield investments, expansions, and relocations, marking a slight 1% decline from the previous year, excluding M&A activities. Additionally, 484 M&A deals were reported, with foreign investors acquiring more than 50% of shares. The U.S. led in greenfield projects with 235, while the EU remained the top source region. Overall, FDIs in Germany are mostly owned by Luxembourg, the Netherlands, the U.S., Switzerland and the UK, which represent more than 60% of the total stock. France, Ireland, Italy, Austria, and Japan are also investing in the country. FDIs are mainly oriented towards finance and insurance, manufacturing and trade, information and communication, management and consultancy activities, and real estate. According to the OECD, in the first half of 2024, FDI inflows to Germany reached a total of USD 16.1 billion, down from almost USD 21 billion in the same period one year earlier. Germany faces a challenging economic outlook due to declining FDI inflows and project delays. Preliminary data from fDi Markets shows that foreign investors announced only 305 greenfield projects worth USD 16.7 billion between January and August 2024, compared to 776 projects valued at USD 43.3 billion during the same period in 2023. Despite the drop, capex intensity remained high, consistent with 2021–2023 levels. Several projects were halted or delayed. For instance, Intel postponed its EUR 30 billion semiconductor site in Magdeburg until at least 2026, while Wolfspeed deferred its USD 3 billion plant in Saarland to mid-2025. The battery sector also faced setbacks, with companies like Northvolt and Stellantis pausing factory plans for the EV transition. These delays undermine the German government's efforts, which included a USD 11.4 billion incentives package for Intel in 2022 and an average of USD 1.53 billion per semiconductor project from 2010 to 2024.
Among the country’s strengths are a highly powerful and diversified industrial network, a highly skilled workforce with a good command of English, reliable infrastructure, a favourable social climate, a stable legal framework and a location at the heart of Europe. Its main weaknesses are a high tax rate (for both individuals and businesses), rather inflexible labour laws, and a high dependence on the automotive and mechanical industries. Germany's legal, regulatory, and accounting systems are complex but transparent and aligned with developed-market standards. Businesses operate in a well-regulated, high-cost environment where foreign and domestic investors receive equal treatment regarding investment incentives and property rights. To safeguard national security, the government has tightened screening for foreign investments, particularly after high-risk acquisitions by Chinese investors. Authorities may review acquisitions involving more than 10% of voting rights in critical sectors, such as healthcare, AI, autonomous vehicles, robotics, semiconductors, additive manufacturing, and quantum technology. Foreign investors in these fields must notify the government and may undergo investment reviews. Germany’s business climate is favourable, and the country ranks 15th among the 180 economies on the 2024 Corruption Perception Index and 18th out of 184 countries on the latest Index of Economic Freedom.
Foreign Direct Investment | 2020 | 2021 | 2022 |
---|---|---|---|
FDI Inward Flow (million USD) | 56,204 | 46,468 | 11,053 |
FDI Stock (million USD) | 1,153,099 | 1,057,990 | 1,007,533 |
Number of Greenfield Investments* | 1,105 | 1,395 | 984 |
Value of Greenfield Investments (million USD) | 26,504 | 47,231 | 34,398 |
Source: UNCTAD, Latest data available.
Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.
FDI STOCKS BY COUNTRY AND INDUSTRY
Main Investing Countries | 2022, in % |
---|---|
Luxembourg | 21.1 |
The Netherlands | 17.5 |
USA | 10.0 |
Switzerland | 8.2 |
United Kingdom | 8.2 |
France | 5.3 |
Austria | 4.1 |
Italy | 3.9 |
Japan | 3.5 |
Main Invested Sectors | 2022, in % |
---|---|
Financial and insurance activities | 43.9 |
Activities of head offices; management consultancy activities (holding companies with management function) | 34.7 |
Manufacturing | 5.5 |
Wholesale and retail trade, maintenance | 4.7 |
Source: Deutsche Bundesbank, Latest data available.
- Form of Company Preferred By Foreign Investors
- GmbH
- Form of Establishment Preferred By Foreign Investors
- Distributors, commercial agents.
- Main Foreign Companies
- Ford, General Motors, Exxon Mobil, Sony, Toshiba (German), Total.
- Sources of Statistics
-
Federal Statistical Office
Germany Trade and Invest
What to consider if you invest in Germany
- Strong Points
-
Germany's strengths for FDI are:
- Strategic location in the centre of Europe
- Political stability and a good anchor in international relations
- The largest population of the European Union
- Infrastructure among the most developed in the European Union
- Strong manufacturing base (almost a third of the GDP)
- Strong exports (high range products and diversified clients)
- Advanced technology and expertise
- Highly qualified work force
- Consolidated public finances
- Competitive taxation.
- Weak Points
-
Germany's weaknesses for FDI are:
- Eastern part of the Germany (former DDR) is struggling to catch up with the western part in many areas
- Ageing population weighs heavily on growth
- German economy is highly dependant on exports, especially to China
- Ageing infrastructure
- Unproductive service sector
- Insufficient infrastructure for development of start-ups
- A low investment/GDP ratio
- Lack of engineers
- Government Measures to Motivate or Restrict FDI
-
Germany distinguishes itself with a business climate compliant with international standards and with transparency of its judicial system. The German Government is implementing measures aimed at encouraging investments including:
- Grants for investments (Cash Incentives Program: GRW)
- Grants for R&D for different research categories (fundamental research, industrial research, experimental development)
- Grants for hiring personnel (programs focusing on recruitment support, training support, wage subsidies and on-the-job training)
- Public loans
- Public guarantees
For more information, visit the website of Germany Trade & Invest (GTAI).
Protection of Foreign Investment
- Bilateral Investment Conventions Signed By Germany
- Germany has signed bilateral investment treaties (BITs) with numerous countries. To see a list of participating countries, consult UNCTAD website.
- International Controversies Registered By UNCTAD
- The ISDS Navigator contains information about known international arbitration cases initiated by investors against States pursuant to international investment agreements. Germany is involved in 69 cases as Home State of claimant and in 4 cases as Respondent State.
- Organizations Offering Their Assistance in Case of Disagreement
-
ICCWBO , International court of arbitration, International chamber of commerce
ICSID , International Center for settlement of Investment Disputes
- Member of the Multilateral Investment Guarantee Agency
- Germany is a signatory to the Convention of the MIGA.
Country Comparison For the Protection of Investors | Germany | OECD | United States |
---|---|---|---|
Index of Transaction Transparency* | 5.0 | 6.5 | 7.0 |
Index of Manager’s Responsibility** | 5.0 | 5.3 | 9.0 |
Index of Shareholders’ Power*** | 5.0 | 7.3 | 9.0 |
Source: The World Bank - Doing Business, Latest data available.
Procedures Relative to Foreign Investment
- Freedom of Establishment
- Foreign investors are generally subject to the same conditions as German investors and there are no administrative controls specifically for foreign investments in Germany, and no specific key laws or regulatory authorities that govern foreign investment. Regulated industries (such as pharmaceuticals, military products, radioactive substances and so on) are subject to special controls.
- Acquisition of Holdings
-
Foreign investors may have a majority holding in the capital of a local company.
Under the Foreign Trade and Payments Ordinance, the Federal Ministry of Economics can prohibit or restrict the direct or indirect acquisition of at least 10% of the voting rights in a German company. There are two areas of review:
- Sector-specific review, e.g. defense sector
- Cross-sectoral review, pursuant public order or public security in sensitive sector such as critical infrastructure and software for energy, IT and health sector
- Obligation to Declare
-
Germany Trade & Invest (the agency responsible for the promotion of foreign investment) provides information about necessary authorisations or declarations.
The most recent changes to the German Foreign Investment Act (the GFI Act) were adopted by the German parliament on 17 June 2020 and came into force on 16 July 2020, when the GFI Act was published in the Federal Law Gazette. - Competent Organisation For the Declaration
-
Federal Ministry for Economic Affairs and Energy (BMWi)
- Requests For Specific Authorisations
-
Investments must be governed by the policies and the procedures specific to the sector.
Private share sales are usually subject to the following closing conditions/conditions precedent:- Merger control clearance by the Federal Cartel Office or the European Commission.
- Foreign investment control clearance by the Ministry of Economics and Technology.
Under the Foreign Trade and Payments Ordinance, the Federal Ministry of Economics can prohibit or restrict the direct or indirect acquisition of at least 10% of the voting rights in a German company. There are two areas of review:
- Sector-specific review, e.g. defense sector.
- Cross-sectoral review, pursuant public order or public security in sensitive sector such as critical infrastructure and software for energy, IT and health sector.
Office Real Estate and Land Ownership
- Possible Temporary Solutions
- Temporary office solutions
- The Possibility of Buying Land and Industrial and Commercial Buildings
- There are no restrictions on the ownership or occupation of real estate by foreigners in Germany.
- Risk of Expropriation
- According to German law, for public purposes only and in a non-discriminatory manner, private property can be expropriated. The process must be transparent, and victims must receive prompt, adequate and effective compensation.
Investment Aid
- Forms of Aid
-
Germany offers numerous incentives to all investors, regardless of nationality or origin.
Incentive packages may be structured as:- Tax incentives.
- Cash incentives (subsidies paid out in connection to proven investments).
- Loans with preferred conditions or guarantees.
- Capital/shareholding investments by state authorities, in exceptional cases.
For more information, please visit the website of Germany Trade and Invest
- Privileged Domains
-
State aid is granted throughout Germany for creating (long-term) employment, for developing research, development and innovation (R&D), for environmental protection, for public guarantee and public loan programmes.
For more information, refer to the Germany Trade & Invest (GTAI) is the economic development agency of the Federal Republic of Germany. - Privileged Geographical Zones
- Regions with the highest incentives rates offer grants of up to 30 percent of eligible expenditures for small enterprises. Small enterprises situated in the border regions to Poland may receive up to 40 percent funding. These higher incentive rate regions are mainly situated in Eastern Germany. (Macklenburg- Vorpommern, Brandenburg, Saxony, Saxony-Anhalt, Thuringia).
- Free-trade zones
- The eastern part of Germany. There are five free trade zones established under EU law: Bremerhaven, Cuxhaven, Deggendorf, Duisburg and Hamburg.
- Public aid and funding organisations
- Germany Trade & Invest (GTAI)
Investment Opportunities
- The Key Sectors of the National Economy
- Consumer goods, since the number of inhabitants is the highest in Europe. Subcontracted goods, as Germany is the the leading producer of machine tools. This sector may see a new boom thanks to the development of numerical industrial processes. The other key sectors are: advanced materials, aerospace industry, agriculture, automobile industry, pharmaceutical and chemical industry, wholesale, retail, online trade.
- High Potential Sectors
- Services to consumers, high-tech, multimedia, electronic, health and biotechnologies, renewable energies (ambitious plan of development in solar, wind and renewable energy storage)
- Privatization Programmes
- There is no privatisation program ongoing. As a matter of principle, Germany treats foreigners equally in privatisations.
- Tenders, Projects and Public Procurement
-
Tenders Info
, Tenders in Germany
Ted - Tenders Electronic Daily , Business opportunities in EU
DgMarket , Tenders Worldwide
Sectors Where Investment Opportunities Are Fewer
- Monopolistic Sectors
- Education. State-owned enterprises are limited to basic services (water, energy and national rail transportation).
Finding Assistance For Further Information
- Investment Aid Agency
-
Germany Trade & Invest (GTAI)
- Other Useful Resources
-
Investment Guide to Germany (GTAI)
- Doing Business Guides
-
Doing Buisness and investing in Germany (PwC)
Any comment about this content? Report it to us.
This content is provided by Business Wales, an agency of the Welsh Government, and is intended to Welsh individuals and companies for information purposes.
© eexpand, All Rights Reserved.
Latest Update: March 2025