Expanding Business To Germany? Read These Points First
Are you looking for a place with exceptional talent to expand your business?
Germany could be the perfect spot for you.
This article aims to help you navigate the cultural characteristics, laws, rules, and regulations when entering the German market.
Things to remember to have a successful business in Germany:
1. Setting up a business
Germany is well known for its global standing and modern outlook, but the World Bank ranked Germany 114th globally in 2019 for the ease of starting a business in Germany. It defines the various procedures companies are required to navigate for setting up a business.
Among other steps, starting a business in Germany involves checking the supply of the corporate name at the local chamber of industry and commerce, registering the corporate with the local trade register also as registering with the association of the relevant trade and liaising with local labor, business standards, and tax offices.
Professional Employer Organizations (PEOs) and Employers of Record (EORs) help companies set up businesses across the globe. With a global EOR, you can even hire remote employees from Germany without setting up a local subsidiary. It even saves you the hassle of understanding the nitty-gritty of business regulations in Germany. The EOR experts can make this a cakewalk for you.
2. Hiring and onboarding local talent
Germany boasts a highly-educated workforce, including among its migrant population, whose average education levels are rising. Still, there’s a talented labor shortage, particularly within the nursing and care, construction, and IT industries. It makes for competition between companies to hire the top talents.
The country’s worker shortage saw the December 2018 passing of the skilled labor immigration law. This law makes it easier for employers to recruit the skilled staff they need from outside the European Union as businesses have to undergo the burdensome process of proving there’s nobody in Germany or the EU who can fill the role.
The law also opens non-EU recruitment to all or any work sectors as previously companies were restricted to hiring foreigners in specific sectors only.
Obtaining a working (employment) visa for a professional foreigner in Germany can take as long as three months and requires tons of paperwork. The EOR HR administration experts can assist companies with the application process to make sure it goes smoothly.
3. Tax payments
Organizations can expect a mean of nine tax installments per year, taking around 218 hours altogether to deal with. The standard rate of VAT for an enterprise in Germany is 19%, while the corporate income tax rate is 15%. A ‘fortitude extra charge’ of 5.5% additionally exists and should be paid by a private individual or lawful substance that owes charge, capital increases expense, and friends charge in Germany.
Tracking the taxes and understanding the rules and regulations associated with it becomes tricky for someone new to this. It is where an EOR comes into the picture to simplify and automate the taxation process.
4. Culture
Doing business in Germany requires an honest level of cross-cultural awareness. Their fondness for punctuality is well known, so it should come as no surprise that within the corporate world, Germans value thorough planning.
Those new to the country can expect to encounter many rules and regulations and a low degree of flexibility and spontaneity. Having a touch of patience is crucial to successful business negotiations.
The German communication style is clear and direct with no language subtleties. They prefer efficient and ‘to the point’ conversations. Gifting among associates isn’t common, neither is mixing work with personal life.
5. Other rules and guidelines
To ensure an efficient process, rules and guidelines need to be discussed and determined beforehand. “Ordnung muss sein”, as Germans say, indicates that directions are needed to perform well.
Since they wish to avoid uncertainty, these regulations provide specified security.
Conclusion
Doing business in Germany, you ought to study culture, customs, and modern standards.
It is significant to understand the law and regulations within the German government. It will get you the respect of your conversational partner, and from there, it’s only a step to trust, which is the basis of a long-term and healthy professional relationship.
Skuad, Velocity Global, Globalization Partners are some of the global EORs that can help you with expanding your business hassle-free in Germany. These platforms simplify everything from hiring, onboarding, managing payroll, and compliances, automating taxes, etc. So jump right into building your remote teams from anywhere in the world with these global HR and payroll platforms.
