The current German government was formed in December 2013. The elected Cabinet o
ID: 374344 • Letter: T
Question
The current German government was formed in December 2013. The elected Cabinet of the so-called grand coalition consists of the two major contemporary parties in Germany. Nine ministers come from the ranks of the conservative parties CDU and CSU. Six ministers come from the social-democratic party SPD. Angela Merkel (CDU) was re-elected as Chancellor and after her previous elections in 2005 and 2009, this is her third consecutive term in office. The next election to the German Federal Parliament (Bundestag), which decides on the next Chancellor, is scheduled for 24 September 2017
Germany's legal system is based on civil law. It consists of a legislature and an independent judiciary. Legislative power resides at both the federal (Bund) and the state (Land) level. The constitution presumes that all legislative power remains at the state level unless otherwise provided. Many fundamental matters of administrative law fall within the jurisdiction of the individual federal states.
In principle, the German market is open for investments of any kind. However, the Federal Ministry for Economic Affairs and Energy (Bundesministerium für Wirtschaft und Energie, BMWi) has certain powers to review and prohibit or restrict a transaction for reasons of public order or security.
Investors from outside the EU who acquire 25% or more of the shares in a German enterprise can be subject to an examination by the Ministry for Economic Affairs and Energy. Acquisitions by investors from within the EU may likewise be reviewed if one of their shareholders comes from a third country and holds 25% or more of the shares. If the Ministry concludes that the acquisition constitutes a sufficiently serious threat to public order or security, it can either prohibit or restrict the investment, provided it has informed the investor of the review within three months after conclusion of the acquisition contract. In order to obtain prior legal certainty, an investor can apply for a clearance certificate from the Ministry.
Special rules apply in the defence and cryptology sectors. Foreign investors must report to the Ministry any acquisitions of 25% or more of the shares of enterprises that produce or develop:
Goods subject to the German war weapons control laws.
Certain IT-security products.
Specially designed motors or gears for combat tanks and other armoured military vehicles.
The validity of the purchase contract depends on the approval of the BMWi, which can prohibit the acquisition to protect vital national security interests.
Under the antitrust laws of Germany and the EU, the acquisition of shares in a German enterprise may require clearance from the Federal Cartel Office (Bundeskartellamt) and/or the European Commission.
Germany does not restrict the export or import of capital, except for restrictions on transactions based on sanctions or restrictive measures or national legislation (see Question 4).
For statistical purposes only, every individual or corporation residing in Germany must report to the German Federal Bank (Deutsche Bundesbank), subject only to certain exceptions, any payment received from or made to an individual or a corporation resident outside Germany, if the payment exceeds EUR12,500 (or the corresponding amount in other currencies).
In addition, residents must submit reports on claims against or liabilities to non-resident individuals or corporations amounting to more than EUR5 million per month. Also, there is a reporting obligation for claims against or liabilities to non-residents arising under derivative financial instruments and exceeding EUR500 million per quarter. Further reports have to be made with regard to the value of assets of non-resident companies in which a certain proportion of shares or voting rights are attributed to the resident (10% or more) or to one or more non-resident companies controlled by the resident (more than 50%).
Moreover, a resident has to report the value of its non-resident branch offices and permanent establishments. Likewise, residents must report the value of the assets of resident companies in which a certain proportion of shares or voting rights is held by a non-resident (10% or more) or by one or more resident companies controlled by a non-resident (more than 50%). This reporting obligation also applies to the value of the non-resident's resident branch offices and permanent establishments.
Investment incentives are provided by the German federal government, the German federal states and the EU. The incentives include, for example, cash incentives, interest-reduced loans, public guarantees, labour-related incentives and R&D incentives. While some programmes specifically target small and medium sized enterprises (SMEs), investment incentives are, in general, available to all investors if the investment is beneficial for the German economy. However, the programmes may require companies to have a registered seat or management in Germany.
The most important German institution for financing investments is the KfW Banking Group (Kreditanstalt für Wiederaufbau, KfW) (), the nationally operating development bank of Germany owned by the Federal Republic and the federal states. It makes available a number of different financing tools such as promotional loan programmes, mezzanine financing and private equity. In addition to the KfW, the German federal states have their own development banks that finance projects within their respective state boundaries.
More information on incentive programmes in Germany is available at Germany Trade and Invest (). This is an official and up-to-date site promoted by the Ministry for Economic Affairs and Energy, providing information about investment opportunities in Germany and general investment conditions.
The Ministry for Economic Affairs and Energy website (www.bmwi.de/Navigation/EN/Home/home.html) provides information about the German economy in general, as well as about key issues such as energy, foreign trade and technology.
Explanation / Answer
Discuss the principle local competition of Germany.
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