Free Trade Zones in Germany
Free Trade Zones (FTZs) in Germany are special free trade areas established by the government with the objective of attracting foreign direct investment to the country, and thus, stimulating the domestic economy. Business owners and foreign investors can take advantage of the various fiscal and non-fiscal incentives provided to them in this zone by setting up their company there. Established by the Federal Law – Section 20 of the Customs Administration Act, states can apply for the conversion of some of the customs region to FTZs to the Federal Ministry of Finance. These Zones are subjected to the Community Customers legislation.
Tetra Consultants will first understand your corporate activities, free trade zone requirements, and long-term motives, before making a recommendation on the most suitable type of Free Trade Zone in Germany for you. We will also guide you through the requirements and regulations of each of these free trade zones and how you can incorporate your company in your selected zone.
What are the different types of Free Trade Zones in Germany?
- Free Trade Zones are called ‘Free Ports’ in Germany. Currently, there are three such free trade areas operating under the law of the European Union, spread across the country. These can be segregated into Control Type I Free Zones which include the Free Port of Bremerhaven and Free Port of Cuxhaven and Control Type II Free Zone which includes the Free Port of Duisburg.
- In the Control Type I Free Zone, businesses do not need to declare the products. In fact, the customs office checks these products on entry and exit from the Zone.
- In the Control Type II Free Zone, companies would need to declare the products to take advantage of the incentives offered by the authorities in these regions. These products are not checked upon entry and exit from the Zone by the customs office.
Free Port of Bremerhaven (Freihafen Bremerhaven)
- Spread across 4 million square meters of the territory of Germany, this Port is located in Bremerhaven, in the northwest of Germany.
- Separated from the customs area by a fence, this Port is governed by the Customs Office of Bremerhaven, a division of the Main Customs Office of Bremen (Hauptzollamt Bremen).
- With a well-developed infrastructure, namely, a 1 million square meters of cargo handling region, this Port can handle large shipments quickly.
- With the customs office overseeing it from multiple checkpoints, not only are the goods cleared quickly and efficiently, but also companies are guaranteed security through the privacy policy.
- Companies from the following sectors can be set up here:
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- Storage
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- Trading
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- Logistics
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- Services
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- Shipping
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- Commercial
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- Others
Free Port of Cuxhaven (Freihafen Cuxhaven)
- Spread across approximately 263 thousand square meters, the Free Port of Cuxhaven has been established in Saxony since 1896.
- Like the Free Port of Bremerhaven, the Free Port of Cuxhaven is separated from the rest of the customs area by a fence.
- It is governed by the Customs Office of Cuxhaven, a division of the Main Customs Office of Oldenburg (Hauptzollamt Oldenburg).
- Companies from the following industries can be set up here:
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- Storage
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- Trading
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- Fishing
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- Logistics
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- Commercial
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- Services
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- Others
Free Port of Duisburg (Freihafen Duisburg)
- Established in 1990, the Free Port of Duisburg is spread across 120,000 square meters of German territory.
- Located in Ruhrort in Duisburg, it is the first inland FTZ in Germany and the largest inland port in all of Europe.
- It is governed by the Customs Office of Ruhrort, a division of the Customs Office of Duisburg (Hauptzollamt Duisburg).
- The Free Port of Duisburg has various docks along the river, Rhine. Hence, it serves as the connecting point of water, road, and railway traffic.
- Besides, it also has various cargo handling areas, allowing clients to transport goods quickly and efficiently.
- Companies from the following industries can be established in this region:
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- Storage
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- Trading
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- Logistics
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- Shipping
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- Services
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- Commercial
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- Others
Why should you set up a company in Germany Free Trade Zones?
- In Germany, both locals and foreigners can establish their businesses in the Free Trade Zone Germany and are subjected to equal treatment. This implies that foreigners can have complete ownership of their company.
- A company in the FTZs of Germany will not be subjected to any Value Added Tax or duty on their products.
- Companies established in the Free Trade Zone Germany will also not be subjected to any import duties. Therefore, any products stored in these regions are not required to declare their imports. However, if these products are to be taken from the FTZs to elsewhere, export declarations must be filed.
- The FTZs in Germany have a well-developed infrastructure and resources that businesses can take advantage of.
- Besides, in these free trade areas, there is a large and highly skilled labour force that is relatively inexpensive.
- The Free Trade Zone Germany are strategically located near ports and airports, allowing them to remain connected to global markets.
- The government policy and regulations are flexible and business-friendly.
- There is no capital control imposed on companies in Germany, allowing for an easy and smooth transfer of funds worldwide.
- The government motivates businesses to set up these FTZs with various aids, grants, and interest-reduced loans.
- Germany has an extensive network of tax treaties with partner nations, thus, you would not have to pay taxes twice.
How to set up your business in Germany Free Trade Zones?
Now that you have some information about Free Trade Zone Germany, you need to understand how you can set up your business in Germany.
Step 1: To plan and strategise
- Prior to starting the incorporation process, you need to decide on a suitable FTZ for your company.
- You should also decide on a suitable legal entity to incorporate your company.
- The following are some of the legal entities that you can choose from:
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- GmbH (Gesellschaft mit beschränkter Haftung)
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- UG (Hhaftungsbechränkt)
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- General Partnership (Offene Handelsgesellschaft – OHG)
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- Limited Partnership (Kommanditgesellschaft)
- Our team of experts at Tetra Consultants will need to understand your business activities, requirements, and long-term objectives before recommending a suitable FTZ and legal entity for your company.
Step 2: To check whether all pre-registration requirement is met
- Once you have chosen the Zone you wish to register your business in and your corporate entity, you need to ensure that you meet certain free trade zone requirements:
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- Reserve your preferred business name with the German Chamber of Commerce.
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- Preparation of the articles of incorporation.
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- Preparation of other corporate documents based on your business activities.
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- Have a local registered office address.
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- Have the required paid-up capital in a bank account.
Step 3: To incorporate your company in Germany Free Trade Zones
- Tetra Consultants will first apply to the German Companies Registry to register your company.
- Following this, we will receive the incorporation documents that you will require for your company including the Memorandum and Articles of Association, Certificate of Incorporation, and more. We will courier the same to your preferred office address.
- You can employ our translator service to translate the corporate documents and data, which will be in German.
- You will also be required to register for tax with the Finanzamt (tax office).
Step 4: To open a corporate bank account
- Our banking team at Tetra Consultants will assist you in opening a corporate bank account in Germany for your newly incorporated company by leveraging our existing banking network.
- We will receive the internet banking token and access codes on your behalf and courier them to your preferred address.
Step 5: To stay compliant with the laws of the government
- Once the incorporation process is completed and the new company is operational, Tetra Consultants will ensure that your company remains compliant with the government regulations by filing tax returns annually, obtaining mandatory insurance, and more.
How to proceed with registering a company in Germany Free Trade Zones?
With Tetra Consultants by your side, the incorporation process of your company in the FTZ region in Germany is a smooth and convenient process without hassle. We offer a comprehensive service package to our clients which include the following:
- Planning and Strategising (to select a suitable Free Port area and legal entity for your company)
- Registration process (registering your company with the relevant authority and obtaining required trade licenses)
- Opening a corporate bank account
- Ensuring compliance with government policies
Contact us for more information on how you can register your business in Germany. Our dedicated team of experts will revert within the next 24 hours and answer any queries you may have.
FAQ
Are there any free trade zones in Germany?
- Yes, there are three operational FTZs (also called Free Ports) spread across the country.
- The purpose of these Trade Zones is to attract foreign direct investment and to stimulate the domestic market.
- Contact us to find more information about these FTZs in Germany and our team will revert within the next 24 hours.
Can a foreigner register a company in Germany?
- Yes, foreigners can do so in Germany and can have 100% ownership of their company. However, you may be required to travel to Germany for the incorporation process and would, therefore, require a visa.
Why should I set up my company in Germany?
- You should consider setting up your company in Germany for the following reasons:
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- Foreigners can have complete ownership over their company.
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- Businesses are not required to pay Value Added Tax on products or import duties.
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- Germany has a well-established infrastructure with a highly skilled labour force that businesses can take advantage of.
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- Germany has a stable political and economic environment with business-friendly and flexible government policies.
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- The government offers various monetary incentives to attract foreign investment and promote economic growth.
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- Germany ranked a 22nd out of 180 countries in 2020 in terms of Ease of Doing Business, as per the World Bank Group.
Who is in charge of the Free Ports in Germany?
- Different areas are managed by different authorities. The following is the list of Free Ports in Germany and their governing body:
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- Free Port of Bremerhaven – Customs Office of Bremerhaven, under the Main Customs Office of Bremen.
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- Free Port of Cuxhaven – Customs Office of Cuxhaven, under the Main Customs Office of Oldenburg.
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- Free Port of Duisburg – Customs Office of Ruhrort, under the Main Customs Office of Duisburg.
Will I need to appoint a local resident director when incorporating my business in Germany?
- No, there is no need for the appointment of a resident director when setting up your business in Germany.
- Since it is compulsory for the director of the company to travel to Germany to incorporate the company, it may serve as a benefit to appoint a person to complete the registration process on your behalf.
- Tetra Consultants offers our clients with a Nominee Director Service. Our legal team will prepare a required contract between the business and Tetra Consultants such that the stakeholders do not lose any control.
What are the activities that my business can perform in the Free Ports of Germany?
- Your company can perform activities in the following industries:
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- Storage
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- Trading
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- Logistics
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- Services
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- Shipping
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- Others
What would be the cost of setting up my company in Germany?
- The total engagement fee that you will be charged depends on the services you require from us. Our services range from helping to guide you in the planning and strategising process to the incorporation process. We also provide additional services such as Nominee Director Services, Translation Services, and more.
- This total engagement fee includes the incorporation cost which needs to be paid to the relevant government authorities in Germany.
- We will further discuss this cost with you before we begin the incorporation process.
Who benefits from Free Trade Zones?
- FTZs are established by the government in different countries to increase foreign investment in the country and leading to the economic growth of the country.
- For the above reason, companies are offered various incentives, fiscal and non-fiscal.
- Therefore, both the government and businesses benefit from these Trade Zones.
What are free zones in the EU?
- These refers to special areas, also referred to as free trade areas or freeports, established within the EU jurisdiction that allow goods and exports from outside the EU to pass through without international trade tariffs. Examples of EU free zones include Spain’s Free Zone of Barcelona, the Malta Freeport, the German Freeport of Bremerhaven and the Free Zone of Verdon in France. Unfortunately, the Netherlands does not currently have an established EU free zone.
Which are other countries that have free zones?
- Other jurisdictions with a FTZ that you can consider setting up your company in include Japan, China and the United States of America (USA).
