Are you a British business thinking of trading with Germany? Here’s what you need to know.
Strong trade affiliation
Despite Brexit, Germany is the UK’s second largest export market and trading partner. In 2019, Germany accounted for 10% of all UK trade (ONS, 2019), and total trade during that period was £136 billion.
Strong economic structure
Germany’s sophisticated political and economic system is supported by developed infrastructure and legal systems and a highly skilled workforce. It offers competitive investment incentives and tax regulations and is host to major international trade shows.
Digitisation is impacting all sectors and business models, including manufacturing processes, digital marketplaces and supply chains.
There is demand in areas of particular UK competence, including big data, artificial intelligence (AI), cyber security, food and drink, consumer goods and the Internet Of Things (IOT).
Germany has a high achieving SME sector known as the ‘Mittelstand’. Many of these businesses are world leaders, but require support with digitisation.
Exporting to Germany
The standard VAT rate in Germany is 19%, with convenience goods charged at 7%. Some services, such as healthcare and banking are exempt from VAT.
If your customer provides their VAT registration number, goods exported from the UK to Germany are zero-rated.
Standard payment terms for business-to-business transactions are 60 days, or 30 days for public authorities. If terms are not met, you can claim late payment interest.
Routes to market
There are various routes to market that could work for you. Options include;
- Agents and distributors can be an effective means of developing a presence in Germany. Fluency in German is a major advantage when trading with local partners.
- Direct sales are possible, but German language skills are essential. Full market coverage would be challenging.
- E-commerce may be a relatively inexpensive option, since it is both easy and cheap to deliver to Germany.
Ease of doing business
22nd / 190 countries (World Banks, 2020)
1.5% (2019, IMF)
GDP per capita
£34,958 (IMF, 2019)