Doing business with Germany

Germany is the Netherlands' main trading partner. It is now time to take things to the next level and become trusted innovation partners. Germans love the innovative, creative solutions that Dutch businesses have to offer, and German thoroughness crossed with Dutch knowledge is a potent combination. With its economic stimulus package, the German government has committed itself to sustainable mobility, while there are also plenty of opportunities for digitalisation and health companies.

Due to its size, location, and stability, the German market has long been a firm favourite among Dutch businesses. This article goes into all the business opportunities that Germany has to offer, as well as the rules you will have to deal with when importing or exporting goods or services. 

Latest news

German economy shrinks

The German economy will shrink by 0.6% this year. This is mainly due to a shortage of skilled staff. An ageing population is also growing in Germany and digitalisation is not going as fast as in other European countries. On the contrary, these other European countries have slight economic growth.

H2Global 

The Netherlands and Germany are set to cooperate more closely on energy and climate issues (in Dutch), which has seen the 2 countries partner up in the German H2Global project. This project kicked off in June 2021 supported by €900 million in German government funding and aims to accelerate the development of hydrogen. Especially in industry, the demand for green hydrogen is expected to increase rapidly. 

Innovation pact 

On January 21 2021, the Netherlands and Germany signed an innovation pact. The aim of this pact is to intensify cooperation (in Dutch) between authorities and businesses in the two countries to help foster innovative and sustainable industry. 

Bilateral trade 

Germany is an industrial powerhouse and its automotive and machinery sectors are world-renowned. Over the years, the German services sector has also grown, with the business services, logistics and telecom sectors being notable examples. 

In 2021, Dutch businesses exported goods worth over €133 billion to German buyers. This marks a 24.9% increase compared to 2020. The main exports were electrical appliances, telecommunications devices, and fruit and vegetables. Our main imports from Germany were road vehicles, electrical appliances, machinery, and medicinal and pharmaceutical products. Imports from Germany totalled nearly €92 billion in 2021, 22.6% more than in 2020. Check out the key figures (in Dutch) on trade between the Netherlands and Germany. 

Promising sectors 

With a population of over 83 million, Germany's economy is the largest in Europe. Germany is full of opportunities for Dutch businesses due to its proximity and prosperity. It is important to realise that Germany is vast, with the region of North Rhine-Westphalia alone being the same size as the Netherlands. Focus on the region in which your product or service is most likely to succeed (in Dutch). Sectors such as IT, sustainable mobility, e-health, smart industry, agritech, wind energy, agricultural digitalisation (in Dutch), and health and healthcare are particularly promising. 

There are tonnes of opportunities for innovative products and services developed by Dutch startups (in Dutch) in the aforementioned sectors. Dutch companies with extensive experience in developing and applying digital solutions in these sectors also have a chance in the German market. Especially if you have a proven revenue model, reliable data and a good dose of adaptability. 

Finding partners 

Germans prefer communicating with local business partners or companies, so you might find it easier to land new business if you hire German staff (in Dutch). You could also work with a local distributor or commercial agent, sell products on a shopping site, or start your own local branch (in Dutch). Whatever you do, make sure that your Dutch business also appeals to German customers. Do this by getting a German phone number, German website, and German brochures, to name but a few examples. 

German trade fairs 

Germany is Europe’s number one destination for trade fairs and is known for its trade fairs for almost all sectors. Local trade fairs can serve as a valuable source of information on the German market. They are a great place to meet new people and build a network. You can find a list of local fairs (digital and physical) and exhibits in the AUMA Trade Fair database. 

Support 

There are various organisations that can help you find suitable partners, some of which provide their services for free and some of which charge a fee. 

• The Enterprise Europe Network (EEN) provides access to a professional network of 600 organisations in more than 70 countries, including Germany. EEN’s digital database contains profiles of German companies looking for partners.
• The Netherlands Enterprise Agency (RVO) can also help you find reliable German business partners. It does this by tapping into its overseas network (in Dutch), which includes embassies and Netherlands Business Support Offices (NBSOs) abroad. RVO will create a personalised overview of business partners (in Dutch)  for you tailored to your needs and wishes. They will also be able to introduce you to potential business partners in person.
• The Netherlands has three NBSOs, in Frankfurt, Hamburg, and Stuttgart. These Dutch government trade offices will help you find representatives, partners, market information, and information on local laws and regulations. Their employees are very familiar with the German market, speak the language, and have a business network.
• German Chambers of Commerce can help you find and vet businesses or register your branch or subsidiary.

Business culture 

We may be neighbours, but German business culture is different from what we are used to in the Netherlands. A few examples: Germans are more formal and often work in companies with a clear hierarchical structure. When reaching out to a German business, do not address people by their first name and make sure you are negotiating with the right person. Commitments from people who are not authorised to make decisions will not get you anywhere. Invest time in your business relationships and build mutual trust. Germans like specialists. Be proud of your expertise and do not be afraid to show it off during a meeting. Stress the quality and solidity of your products or services. 

Laying down agreements

Put agreements with your German partners in writing. German people honour their word and expect their business partners to do the same. If you are reliable, you will find it easier to do business in Germany. Have your contract reviewed by a lawyer who knows the German legal system. Have legal documents translated by a certified translator. 

For one-off purchases or sales, you can also include agreements in a quotation. In addition to prices and the desired method of payment, make sure to lay down your terms in writing, too. Make clear agreements on who will arrange and pay for transportation. Agree on an Incoterm® and lay it down in writing in the contract or quotation. To avoid having to draw up a contract from scratch, consider using one of these model contracts (in Dutch). To avoid problems further down the road, ask your German partner to agree to your quotation or general terms and conditions in writing. 

Exporting goods 

You have made a deal and are about to export your product to Germany. There are no physical borders within the EU, because it is a so-called internal market in which there is free movement of goods. As a result, you do not have to submit an export declaration and your customer does not have to pay import duties on your products. Your German customer will have to pay VAT, but only if both parties have a valid VAT identification number. If your German customer does not have a VAT ID, you will have to charge them Dutch VAT. 

When you export excise goods, your German customer has to pay excise duty. There are different rules on VAT on excise goods. For more information about excise duties and other consumption taxes, visit the website of the German customs authorities. 

Product rules and regulations 

Because the Netherlands and Germany are both EU countries, the rules and regulations for products are partly the same. A few differences: 

• The 'Produktsicherheitsgesetz' (ProdSG). This product safety law harmonises safety standards for all (consumer) products. It lays down specific labelling requirements to ensure product and supplier traceability.
• Product or warranty requirements may vary. Germany has a DIN standard (Deutsches Institut für Normung), which imposes stricter requirements on installation technology and IT equipment. In the Netherlands, products need only meet the NEN standard (NEderlandse Norm). If you want to sell the same product in Germany, it will have to comply with the DIN standard and the NEN standard.
• It is important to keep product liability in mind. As a producer, you bear product liability for injuries and damage caused by a defect in the product. The same applies if you sell imported products in the EU. In product liability cases, the law regards an importer as a producer. You can find rules and regulations for specific services and products in the IXPOS, the German Business Portal. Alternatively, you can reach out to the German Product Contact Point for more information.
• When exporting plants, vegetables, fruit, or plant products (in Dutch) or animals or animal products (in Dutch) to Germany, check whether additional provisions apply. If you want to import medications into Germany, you may need an export certificate from Farmatec.
• Sellers placing packaged products on the German market are subject to different rules on packaging waste collection than in the Netherlands. Under the 'VerpackGesetz' (VerpackG) German packaging law, the first party in the chain, or ‘Erstinverkehrbringer’, to place the products and packaging on the German market, is obliged to collect the packaging.
• The sale of electrical or electronic devices in Germany is governed by the 'Elektrogesetz'. This law applies to all producers and sellers, whether or not they are based in Germany. Under this law, you are required to register with the Stiftung Elektro-geräte Register (EAR) before you place products on the market. With B2C sales you are also responsible for paying the costs of collecting and disposing of electrical and electronic devices.

Importing goods

Goods you buy from businesses from other EU countries are usually subject to Dutch VAT. You do not need an import declaration and will not have to pay import duties. In most cases, your German supplier will send you an invoice with 0% VAT. Calculate how much VAT is due on your purchase and report it in your VAT return. 

If you import excise or consumption tax goods from Germany into the Netherlands, different rules may apply. When importing a passenger car, motorcycle, or van from Germany you pay BPM tax and VAT. The Dutch tax authorities have a dedicated page on paying VAT on specific imported goods (in Dutch) and in special situations. 

European laws and regulations 

When you import products from Germany, they will usually have been approved for use in other EU countries, such as the Netherlands. The Dutch government may only ban a German product in highly exceptional cases. The Dutch Commodities Act contains general rules about product safety. It stipulates that foodstuffs and other consumer products may not endanger the health or safety of consumers. It is also important to keep product liability in mind. 

Driving ban in Germany 

Lorries and tractor or trailer combinations are banned (in Dutch) from driving on German roads on Sundays and public holidays from midnight to 22:00. 

There are European rules for the transportation sector, which also include strict controls on driving times and rest periods for drivers. Drivers are allowed to work up to 60 hours a week. They are required to indicate that they are crossing the German-Dutch border on their tachograph. 

Services 

Dutch service providers may also offer their services in Germany, even if they do not have a local branch. As in the Netherlands, you are not allowed to practice any profession you want without the necessary qualifications in Germany. Professions such as photographer, consultant, or copywriter are liberal professions, which means you do not need a degree or licence. In Germany, there are many protected professions that require specific qualifications, such as bakers, hairdressers, or orthopedists. 

Mandatory licence 

In order to perform construction work (in Dutch)  in Germany, for example, you have to be qualified. Check whether the same goes for your industry. On the website of the ‘Zentralverband des Deutschen Handwerks (ZDH)’, you can find a current list of licensed professions. With a KVK-issued EU declaration (in Dutch), you can demonstrate that your Dutch qualifications and your professional competence correspond to the obligations in Germany. 

Labour law 

If you or an employee is going to work in Germany temporarily, check in advance whether you have to report this digitally to the 'Finanzkontrolle Schwarzarbeit' of the German customs authorities. When working on German territory, the German labour law, or 'Arbeitnehmer-Entsendegesetz' (AEntG) applies. This means you have to comply with German rules on minimum wages, minimum amount of paid leave, and health, safety, and hygiene conditions at work. Inspections are common in Germany, especially on construction sites. 

Social security 

An A1 certificate of coverage is proof that you have social insurance coverage in the Netherlands. You can request this certificate from the Social Insurance Bank (SVB) to avoid paying a social security contribution in Germany. 

VAT

Whether you have to charge VAT to your German customer depends on the type of customer to whom you provide the service. When providing services to consumers, you usually charge Dutch VAT. If your customer is a business, do not charge VAT but reverse charge it to your customer instead. Your German customer will calculate the VAT and report it locally. 

Income tax

Does your employee spend more than 183 days working in Germany in any 12-month period from your permanent establishment in Germany? In that case, they will have to pay income tax in Germany from the first day they work there under the 183-day rule (in Dutch). 

Tax representative 

The tax representatives (in Dutch) we have in the Netherlands do not exist in Germany. If you need a German VAT number for local sales or services, you will have to request one from the Tax Office in Kleve. You can, however, appoint a tax agent in Germany. This agent, for example, an accountant or bookkeeper, can apply for a VAT number on your behalf and fulfil all your VAT obligations in Germany.