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Starting a business activity in Germany – sales manager’s point of view

6 May 2014

German market is certainly one of the most advanced markets and represents a major challenge for many companies coming from Central and Eastern Europe. Still, Germany’s strict regulations that do not allow any misinterpretations or exceptions, sometimes make it very difficult for certain companies to develop a business in Germany. At the same time, German market remains one of the most competitive and demanding in Europe.

If you are asking yourself what you should take into consideration when starting a business in Germany, here are a few tips:

 

Do not hesitate to hire a tax consultant

In Germany there are more forms of business compared to those existing in Slovakia or the Czech Republic, whether it is a self-employer (sole trader) or company. It is therefore necessary to consult, ideally with a German tax advisor in advance, which form is in terms of taxes, duties and other aspects most appropriate for a specific business plan. A German tax advisor is also recommendable due to its valuable input in other areas such as accounting and payroll.

Patrícia Kasajová
By investing in a professional tax advisor’s experience with the local regulations, you can avoid unnecessary complications that may occur due to specific accounting rules or due to issues in the communication and data exchange with the authorities – specifies Patricia Kasajová, Country Business Leader Accace Germany. If the company is represented by a tax consultant, you can also have other benefits such as extending the time allowed for filing the tax returns.

Characteristics of German tax system – trade tax

The tax on corporate income in Germany is 15.825% (15% + solidarity surcharge), while the tax on personal income is progressive and it ranges from 14% to 45%. “In Germany, the location is a serious matter for any new business due to a tax that does not apply in all Eastern European Countries: the trade tax.” says P. Kasajová. The trade tax varies depending on the location of the registered office. The highest tax applies to companies located in cities like Munich, Stuttgart and Frankfurt, where the rate can move up to 490%.

The calculation is done from the nett profit. From this amount is an amount of 24.500 EUR being deducted by the personal capital companies and by freelancers. From the remaining amount is a 3.5% base calculated, which is then multiplied with the fixed yearly rate for a specific location (for example, 490% for Munich) and the result is the amount of taxes on trade.

 

The key is to understand and respect the German mentality

An important factor when entering the German market and establishing trade relations, is a good knowledge of German mentality and habits. “Based on my experience as a sales manager in Germany, I have to say that it is always a good idea to “tune” their note, without bringing in the Eastern negotiations style characterised by spontaneity and openness. Dinner parties are not a proper moment for doing business in Germany”, mentions P. Kasajová, who also points out that when establishing a business relation this approach is not always perceived as a positive one mainly because of the deep-rooted strict formality of Germans.

Get ready for a formal communication

German business partners are receptive to punctuality and accuracy, therefore a simple mistake like being late for your first business meetings might significantly deteriorate your professional relationships on a long term, because you will be perceived as an unreliable partner. Based on the principle that “less is more”, negotiations are usually conducted in a clear, concise and factual manner. Therefore, attempting to lighten the atmosphere with various jokes or familiar behaviour is not appreciated as compared to Eastern European countries where sometimes such interventions make the negotiations easier.

Moreover, Germans prefer to be informed about the contents of the negotiation in advance and all confirmations must be sent in written. The written form leaves no room for interpretations and is the only form of communication used in the communication with authorities as well. “Do not be surprised if, when you submit an inquiry by email to a local institution, the response will come in the form of a letter. Even if you will insist to reply by email again, you will continue to receive all answers in the form of letter, according to the very strict local procedures”, says P. Kasajová. And if you thought that faxes are dead and there is no need to make one available at your company’s headquarter, you should think twice, because they are still highly used by local companies.

Impress by using a proper German business language

Using English language when conducting an international business is already too common, therefore if you are a German speaker, it is more likely to establish faster a business relationship in Germany. This is also a very strict criteria when choosing your employees, since there are certain jobs that require a native speaker.

 

Trust your skills and share your unique experiences

Despite the many similar experiences we might have in common with various individuals in the same industry, everyone needs to stand out with their unique achievements and abilities at some point, especially when this person is representing a company in a country like Germany. When two different cultures such as the Western European and the Eastern European one meet, there are for sure benefits for both sides, especially in a world where globalization is a “two-way street”.

 

Kontakt:
Patrícia Kasajová
Country Business Leader
+49 1517 0528 083
patricia.kasajova@accace.com

 

JUDr. Patricia Kasajová, graduate from Law Faculty of Comenius University, is working for Accace since 2006. After 3 years in the branch in Bratislava and 4 years in the Prague branch, Patricia is now Country Business Leader in Munich, Germany. She is in charge of the German branch of Accace and with finding new business opportunities. 

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