Facts Figures Incentives in Germany GTAI Eng 2013

7/29/2019 Facts Figures Incentives in Germany GTAI Eng 2013

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Facts&F

igures

Incentives in Germany Supporting Your Investment Project


2/15Facts & Figures 2013 www.gtai.com

Incentives in Germany

Incentives at a Glance

Germany offers numerous incen-tives to all investors regardlessof whether they are from Germanyor not. Funds are provided by theGerman government, the individualfederal states, and the EuropeanUnion (EU). Incentives in Germanyhave a lasting effect on new busi-

ness as they support companies atall stages of the investment process.

Supporting New InvestmentsMany incentives target new invest-ments with a specific focus on pro-moting economic growth. Germanyhas EUR 26.3 billion funding providedby the EU (co-financed using meansobtained from German national andregional budgets) at its disposal until2013. In addition, Germany and itsindividual states also make their ownincentives funds available. When itcomes to investor production facility

Germanys Different Incentives Packages and Respective Programs

1) only in Eastern Germany

Investment Incentives Package Operational Incentives Package

Interest-reduced Loans

R&D IncentivesLabor-related

Incentives

KfW Loans(National Level)

State Develop-ment Bank Loans

GrantsRecruitment

Support

LoansTrainingSupport

Silent/DirectPartnerships

Wage Subsidies

CashIncentives

GRW(Investment Grants)

IZ (InvestmentAllowance)1

PublicGuarantees

State

Combined State/Federal

+

set-up costs, investors can counton a number of different measuresfrom Germanys extensive invest-ment incentives package. The maininstrument are cash incentives pro-vided in the form of non-repayablegrants.

Promoting InnovationA major focus of Germanys financial

support is put on assisting research &development (R&D) activities inGermany as this is considered to beamong the most important areasfor the development of the Germaneconomy. Accordingly, industryand the public sector have made acommitment to spend around threepercent of national GDP per yearon R&D activities. This amounts toapproximately EUR 70 billion R&Dspending each year. In addition, anunprecedented campaign to fosterthe advancement of new technolo-gies has been launched by the Ger-

man government. This campaign known as the High-Tech Strategyis combining the resources of allgovernment ministries to commitmore than EUR 5 billion annuallyto the development of cutting-edgetechnologies in the form of projectgrants.

Incentives Programs

There are a number of incentivesprograms available which can begrouped into two overall packages:the investment incentives packagewhich includes different measuresto reimburse investment costs; andthe operational incentives packageto subsidize costs once the location-based investment has been realized.Investment incentives can be madeup of cash incentives, interest-re-duced loans, and public guarantees.Operational incentives package com-ponents include labor-related incen-tives and R&D incentives.




Incentives Meetingthe Capital Needs ofInvestment Projects

Investment incentives and operatio-nal incentives can be combined.This means that support does notstop at one point, but is availableat all of the different investment

process stages and beyond suitingthe financial needs at each step ofthe project.

During the investment phase (whencapital needs are high), cash incen-tives programs reimburse directinvestment costs by providing non-repayable cash grants. Public loanprograms and guarantees round offinvestment project financing.

Once operations have started, labor-related incentives programs supportcompanies during all stages of put-ting together a workforce. Particularemphasis is placed on R&D projectswhich receive financial assistancefrom a number of different programs.

How to Determine InvestmentProject Incentives LevelsEach incentives program definesindustries as well as forms of in-vestments (e.g. greenfield projects

or expansions) eligible for funding.Foreign investors are subject to ex-actly the same conditions availableto German investors.

Each program has a set of criteria(such as company size or plannedinvestment project location) whichdetermine individual investmentproject incentives levels.

Company size is determinedaccording to a European Union-wide classification system in

which enterprises are categorizedas being small, medium-sized orlarge according to their employeenumbers, annual turnover and/orannual balance sheet total.

Most incentives programs offer thehighest incentives rates to small andmedium-sized enterprises (SMEs).

Some programs may even specifi-cally target SMEs (this is very oftenthe case with R&D programs).

Other criteria determining projecteligibility may be defined subject toindividual incentives programs andfederal state regulations.

Criteria Determining Company Size

CompanyCategory EmployeeNumbers AnnualTurnover

Annual

BalanceSheet Total

Small Enterprise < 50 ) EUR 10 million ) EUR 10 million

Medium-Sized Enterprise < 250 ) EUR 50 million ) EUR 43 million

Large Enterprise * 250 > EUR 50 million > EUR 43 million

The criterion concerning the headcount is compulsory.

In addition, either of the annual turnover or the balance sheet criteria must also apply.

Source: European Commission

or

or

or

or

The instruments depicted below are the instruments most frequently usedin Germany over the different phases of an investment project.

German Incentives Meet Immediate Capital Needs of Investors

Investment&In

centivesVolumes

1 2 3 4 5

Source: Adapted from IFO (2007) and KPMG (2007)

Frequent German Instruments

Possible Incentive Volume

Investment Volume

Years

Investment

Incentive PackageEmploymentand Training

Incentives R&D Incentives


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Effectively ReducingInvestment Costs

Cash incentives are a means ofsignificantly reducing productionfacility set-up costs. Germany offerstwo major programs directing theallocation of these cash incentives:the Joint Task Program for the Pro-motion of Industry and Trade (GRW Gemeinschaftsaufgabe) and a specialcash incentives program to promoteinvestment activities in EasternGermany called the InvestmentAllowance (IZ Investitionszulage).

GRW Cash GrantsThe Joint Task Program regulatesthe distribution of non-repayablegrants for investment costs through-out Germany. Money availablethrough this program is usually

distributed in the form of cash pay-ments. The amount granted is cal-culated depending on either invest-ment costs or assumed wage costs(of the future operating business).

Regions with the highest incentivesrates offer grants of up to 30 percentof eligible expenditures for largeenterprises, up to 40 percent formedium-sized enterprises, and upto 50 percent for small enterprises

respectively. Several regions withinthe western parts of Germany aswell as Berlin are also designatedincentives regions. In these re-gions, large companies can receivesubsidy rates of up to 15 percent,medium-sized companies up to 25percent, and small companies up to35 percent of eligible project costsrespectively. Each state is free todetermine individual ceilings, butis bound to the maximum incentiveslevel prescribed by its respective

location.

Operational Incentives Package

Cash IncentivesR&D IncentivesLabor-Related IncentivesInterest-Reduced Loans

Cash Incentives

Investment Incentives Package

Public Guarantees

GRW funds must be applied for be-fore the investment project begins.Germany Trade & Invests incentivesexperts offer specific information

and consultation services in advance.

The GRW program will be availableunder the current legislation untilthe end of 2013 (with projects ap-proved in 2013 reaching completion

in 2014/15).

Regions Small EnterprisesMedium-SizedEnterprises

Large Enterprises

A Region 50% 40% 30%

A Region inTransition

40% 30% 20%

C Region 35% 25% 15%

D Region 20% 10%max. EUR 200,000within 3 years

C/D Region 35% / 20% 25% / 10%15% / max. EUR 200,000within 3 years

Incentives Regions and Possible Incentives RatesDefined by the GRW Program

Facts & Figures 2013 www.gtai.com


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Eastern Germanys IZThe IZ is a special incentives pro-gram created to promote invest-ment activities in Eastern Germany.As such, the program is only opento investment projects settling inthe states of Berlin, Brandenburg,Mecklenburg-Vorpommern, Sax-ony, Saxony-Anhalt, and Thuringia.Investors automatically receive IZfunding (subject to all eligibility cri-teria being satisfied) when investingin Eastern Germany.

The IZ program is valid until the endof 2013. Aid intensity is between 2.5and 5 percent depending on compa-ny size and type of investment good(when combining GRW and IZ fund-ing the overall sum received fromboth programs may not exceed themaximum possible GRW incentivesrate of the respective region).


Cash IncentivesR&D IncentivesLabor-Related IncentivesInterest-Reduced Loans

Cash Incentives


Public Guarantees

Future GRW ProgramInvestment grants within the GRWprogram will be available under thecurrent regulations until the end of2013. The new GRW program fea-tures valid from 2014 on are subjectto new EU regional aid regulationswhich will come into force in 2014.These new regulations, which the EUwill finalize in 2013, will determine

which regions will be eligible forregional aid and the aid intensitylevel for the period 2014-2020.Investment projects begun in 2013may still benefit from current GRWregulations for the whole projectterm up to a maximum of threeyears subject to individual federalstate GRW regulations and availablebudgets.

GRW IZ

Eligible Industries Most manufacturing industriesMost service industries

Most manufacturing industriesCertain service industries

Eligible Project Costs (direct) Investment Costs:

Purchase and production costs of certaintangible and intangible assets

Finance leased assetsOperating leased assets under certain conditionsOR(future) Operating Costs

Wage costs for two years

(direct) Investment Costs:Purchase and production costsof certain tangible assets

Finance leased assets

Maximum EligibleInvestment Amount

Up to EUR 500,000 per job created (not exceedingthe maximum total investment costs)

No limit set

General ProgramRequirements

The investment project must createlong-term jobs.The subsidized equipment must remain at the

investment location for at least five years.

The subsidized equipment mustremain at the investment locationfor at least five years.

Cash Incentives Programs Terms and Conditions

Our Project-Specific Incentives Services

Our incentives experts provide a range of project-specific informationand consulting services. These include:

Project-specific comparison of cash incentives options for yourfavored investment locations throughout Germany;Detailed calculation of funding levels available in different regions;Negotiations organization and attendance with relevant fundingauthorities;Preparation of appropriate applications.



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Financing InvestmentProjects with Interest-Reduced Loans

Investors can access publicly sub-sidized loan programs in Germany.These programs usually offer loansat below current market value inter-est rates in combination with attrac-

tive grace periods. These loans areprovided by so-called developmentbanks: publicly owned and organizedbanks which exist at the nationaland state level.

Each financial tool or program of-fered by such banks is accessibleto foreign investors subject to thesame conditions available to inves-tors from Germany.

Investors profit from interest-reduced loans as they are a meansof acquiring capital in a cost effec-tive way during the investmentphase, thus easing financial long-term planning. Small and medium-sized enterprises in particular canprofit from interest-reduced loans.

Public Loan Programson National LevelThe KfW Bankengruppe is the nation-ally operating development bank of

the Federal Republic of Germany.

It makes available a number of dif-ferent financing tools such as pro-motional loan programs, mezzaninefinancing, and private equity.

The KfW is organized into differentdepartments or subdivisions eachspecialized according to differenttarget groups and available financingtools.

The KfW offers different loan pro-grams for investment projects, theEntrepreneur Loan (Unternehmer-kredit) being the most importantone (see box).

Application ProcedureThe KfW is contacted via the appli-cants private bank which normallycomplements its own financial pack-age using the range of KfW financingtools available. Investors shouldhave a German bank or a subsidiaryof their domestic bank in Germanyto ease the KfW loan applicationprocess.

State DevelopmentBank Loan ProgramsIn addition to the KfW, each Germanstate has its own development bankfinancing projects within the respec-tive state. They offer own loan pro-

grams largely targeted at start-upsand growing companies.

Compared to KfW programs, statedevelopment bank loans are gener-ally tailored to meet the require-ments of small and medium-sizedenterprises (according to the Euro-pean Commissions SME definition).

Loans are collateralized with theusual securities. Applications are

made through the investors privatebank to the respective state devel-opment bank.

Interest-reduced loans constitutea subsidy and can usually be com-bined with other public funding.Please note that the total amountof cash incentives available may bereduced when combined with otherprograms.


Cash Incentives R&D IncentivesLabor-Related IncentivesInterest-Reduced Loans

Interest-Reduced Loans


Who can benefit?All privately owned commercialenterprises are eligible (groupturnover may not exceed EUR 500million per financial year). Specialemphasis is placed on start-ups.

What can be financed?The Entrepreneur Loan specifi-cally targets investment projects.Loans of up to EUR 25 million areavailable. The available financingshare is 100 percent of the eligibleexpenses (buildings, machinery,plant, equipment, etc.).

Loan ConditionsInterest rates are risk-adjusteddetermined and subject to thedebtors credit rating and securi-

ties (at levels still below existingmarket rates). They are generallyfixed for ten years by a redemp-tion-free grace period of up tothree years.

The Entrepreneur Loan maybe combined with other KfWand additional cash incentivesprograms.

Entrepreneur Loan(Unternehmerkredit)

Public Guarantees



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Types and Conditions of Public Guarantees

Individual StateGovernments

State Governments andFederal Government inCombination

GeneralConditions

Available throughoutGermany

Available in Eastern Ger-many and in parts of Berlin

Companies which do not have the securities demanded by thebank can apply for public guarantees.

Amount

For guarantee needs up toEUR 10 million.

For guarantee needs overEUR 10 million.

Guarantee covers up to 80% of the loan amount.

ApplicationProcess

Before starting investment,application has to be sub-mitted to state mandatory

(normally the respectivestate development bank) viainvestors commercial bank.

State guarantee committeedeliberates on applicationand submits a recommen-dation.

Finally, state Minister of Fi-nance decides on allocation.

Before starting invest-ment, application has to besubmitted to PwC as federal

mandatory via investorscommercial bank.Guarantee committee levelfits close analysis on ap-plication.

Finally, approval is given bythe federal authorities in co-operation with the respec-tive state.

Concurrent EU authoritynotification necessary.

Public Guarantees

New companies often experience dif-ficulties securing financing throughthe capital markets as, frequently,the required loans can only be col-lateralized to an insufficient degree.In these cases with economicallyappropriate projects public guaran-tees can replace or supplement any

shortfall in securities.

How Public Guarantees WorkA public guarantee is a financial in-strument that encourages financialinstitutions, i.e. commercial banksbut also public banks, to offer loansto new companies. Guarantee pro-grams are specially designed to helpentrepreneurs obtain bank financ-ing by dealing with the collateralconstraint. However, guarantees do

not provide cash support or any kindof credit.

The guarantee functions as a prom-ise by the guarantor to the lenderthat, in the event that the borrowerdefaults on payment, the guaran-tor will repay the lender a specifiedproportion of the foregone principal.In other words, guarantees will begiven by a guarantor to pay all orpart of the loan in the case of bor-rower payment default.

Different Public GuaranteeProgramsDifferent types of public guaranteeprograms exist to support differenttypes of investment projects withinGermany. The guarantee programdepends on the required amount,the size of the enterprise, and theinvestment region.

Generally speaking, public guaran-

tees are accessible for financing ofan investment project or for workingcapital loans.


Cash Incentives R&D IncentivesLabor-Related IncentivesInterest-Reduced Loans

Public Guarantees


Public Guarantees

Our Project-Specific Incentives ServicesPublic loan and guarantee programs round off investment project financ-ing. Our team of experts furnishes you with an overview of the differentloan and guarantee program offers relevant to your specific project. Weorganize the initial contact process to banks and guarantee-managingauthorities by arranging meetings and accompanying negotiations.

The maturity is generally 15 years,or eight years for working capitalloans. Commitments vouched forwithin public guarantees are nor-

mally subject to intensive individualexamination by external assessors.Guarantee fees are paid annually.

The fee paid is a percentage of theactual guaranteed amount at thebeginning of the year concerned.This is fixed over the whole dura-

tion of the loan.



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Supporting HumanResources Build-Up

Labor-related incentives play asignificant role in reducing theoperational costs incurred by newbusinesses. Germanys Federal Em-ployment Agency (Bundesagentur fr

Arbeit) and the German states offera range of labor-related incentivesprograms designed to fit the differ-ent company needs when buildinga workforce.

The range of programs offered canbe classified into four main groups:programs focusing on recruitmentsupport, training support, wagesubsidies, and on-the-job training.

Labor-related incentives are avail-able throughout Germany indepen-

dent of factors such as companysize, industry sector, or investmentproject location. Programs can becarried out and adjusted by the lo-cal job center according to investorneeds.

Matching Personnel:Recruitment SupportWith over 800 local job centerslocated throughout Germany, theFederal Employment Agency assists

companies in finding new employ-ees. Regardless of the qualificationor experience level required, jobcenters offer a highly competent andprofessional service as well as mar-ket expertise to help identify pro-spective employees in all sectors.

Assistance provided covers every-thing from job vacancy advertisingand pre-selection of candidates (i.e.assessment centers) to the provi-sion of facilities for conducting job

interviews.

Because job centers are govern-mental institutions, all services areprovided entirely free of charge.

Enhancing Qualification:Pre-Hiring TrainingProspective employees often needto participate in appropriate trainingmeasures before operating machin-

ery and technical equipment. Suchmeasures can be organized andadministered by external special-ist institutions. In general, trainingprogram costs of up to 100 percentcan be subsidized.

Supporting Integration:Wage SubsidiesEmployers can be granted a directcash payment paid as a proportionof the employees wage. Grants can

account for up to 50 percent of wagecosts including social security con-tributions. They may be provided fora period of up to 12 months. Wagesubsidies are granted when hiringlong-term unemployed individuals.

When hiring long-term unemployedpeople who have disabilities or whoare older, wage subsidies can beraised to a maximum 70 percent ofwage costs paid for a period of up toeight years.

Wage subsidies are generally allo-cated if investors provide long-termemployment contracts. Note thatwage subsidy applications shouldbe made in advance of the contractbeing signed.

Advancing Professional Develop-ment: On-the-Job Training

The German federal states offer avariety of on-the-job training pro-grams. Companies can be supportedwith subsidies covering up to 50 per-cent of all training costs. EuropeanUnion (EU) authorization is requiredif the amount awarded to a singlecompany exceeds EUR 2 million.

Labor-Related Incentives at Different Stages of the Hiring Process

Wage Subsidies

Pre-Hiring Training

Recruitment Support

Available Incentives

On-the-Job Training


Cash Incentives R&D IncentivesLabor-Related

IncentivesPublic GuaranteesInterest-Reduced Loans

Labor-Related Incentives


Stages of Building a Workforce

Stage 1 Finding Suitable Staff

Stage 2 Testing Candidates

Stage 3 Hiring Employees

Stage 4 Further Education



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Labor-Related Incentives Program Provision

Incentives programs are typicallymanaged by the local job centerswhich also administer the relevantfunding budgets. Accordingly, the

available labor-related incentivesand their specific design may varyfrom municipality to municipality.

Local job centers offer their servicesfree of charge. The state ministriesfor labor are responsible for mana-ging on-the-job training programs.


Cash Incentives R&D IncentivesLabor-Related

IncentivesInterest-Reduced Loans

Labor-Related Incentives


Incentives Programs Recruitment Support Pre-Hiring Training Wage Subsidies On-the-Job Training

Program Provision Organization and/or support of recruit-

ment process by

local job centersAssessment centerprovided by training

agencies

Organization oftraining courses

for unemployed

candidates by local

job centers in close

cooperation with

investorNo binding workcontracts required

Provided for employ-ment of long-term

unemployed candi-

dates or unemployed

candidates under the

age of 25 or above 50Company has toprovide a work con-

tract with a mini-

mum 15 hour

working week

For all employeesEU notificationrequired for grants

exceeding EUR 2

million per company

Eligible Costs Job vacancy adver-tisements, applicant

screening and

pre-selection of

candidatesAssessment center

Trainee labor costsTraining coursecosts

Wage costsSocial securitycontributions

Training courses

Possible PromotionRates

Up to 100% ofeligible costs subject

to local job center

budget

Up to 100% ofeligible costs for a

training period of up

to three months

Normally up to 50%of eligible costs for

up to 12 months

Up to 50% ofeligible costs

Managing Authority Local job centers Local job centers Local job centers Appropriate federalstate labor ministry

Public Guarantees

Our Project-Specific Incentives ServicesGermany Trade & Invest provides you with a detailed overview of labor-related incentives programs ranging from recruitment support to on-

the-job training programs. We organize first meetings with local jobcenters and the appropriate federal state labor ministries. Our expertsalso give you advice about how to add labor-related incentives to thewhole incentives package available in Germany.



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Research and Develop-ment Project Incentives

Research and development (R&D)is considered to be among the mostimportant areas for the developmentof the German economy. Industryand the public sector have made acommitment to spend around threepercent of national GDP per year onR&D activities. This amounts to EUR70 billion R&D spending each year.

Accordingly, R&D projects can counton numerous forms of financial sup-port. There are many programs allo-cating R&D grants, interest-reducedloans, and special partnership pro-grams. Financing is provided by theEuropean Union (EU), the Germangovernment, and the individual Ger-man states.

R&D incentives programs generallyprovide money for R&D project per-sonnel expenditure. Other costs forinstruments and equipment mayalso be eligible if they can be clearlyassigned to the relevant R&D project.

How to Benefit fromPublic R&D SpendingTo participate in R&D funding pro-grams, companies must define an

R&D project with clear objectivesand a fixed time line. The projectapplication should highlight the in-novative character of the projectand the technological risks involved.

An application for R&D funding alsohas to set out a commercializationplan, detailing how research resultswill be transformed into products,processes or services which gener-ate additional turnover and/or em-ployment in the region where the

R&D project is located.

The total amount of incentives aproject may receive depends onthe size of the enterprise (small,medium-sized or large), whetherthe project is conducted in coope-ration with other companies orresearch institutes, and the re-search category of the project.

EU R&D IncentivesThe EUs 7th Research FrameworkProgram (FP7) offers financial sup-port to R&D projects at the Euro-pean level. Support is allocated inthe form of grants covering up to75 percent of project expendituresfor small and medium-sized enter-

prises (SMEs). FP7 will run until theend of 2013.

FP7 is the worlds largest researchfunding program with a total budgetof more than EUR 50 billion. Supportis usually provided to R&D projectsworking on a transnational levelwith different project partners. TheEU usually issues a call for propos-als announcing the research area,eligibility guidelines, and the avail-able budget.

R&D Grant Programs

European Commission


Cash IncentivesR&D Incentives

Labor-Related IncentivesInterest-Reduced Loans

R&D Incentives


Public Guarantees

Three Research Categories:

Fundamental ResearchExperimental or theoretical workaimed at gaining new knowledge

Industrial ResearchResearch with a specific practicalobjective aimed at developing newproducts, processes, or services,or at improving existing ones

Experimental DevelopmentResearch aimed at producing

drafts, plans, and prototypes

Technology-open programs

for SMEs

Transnational R&D project

cooperation required

7th Research Framework Program

Programs with specific

technology focus

Transnational R&D project

cooperation required

German Government

Technology-open programsCooperation not always necessary

High-Tech Strategy

Programs with specific

technology focusMostly cooperative projects

German Federal States

Individual Programs

Technology focus depends on program

Cooperation not always necessary



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German Federal GovernmentR&D GrantsAll research programs financed bythe German federal governmenthave been concentrated within thefederal High-Tech Strategy. TheHigh-Tech Strategy defines specificlead markets and priorities as wellas key technologies with a highdependency on ongoing high-techresearch and development eachof these consist of a number of dif-ferent R&D programs.More than EUR 5 billion annuallyis reserved for R&D projects in theform of non-repayable project grants.Grant rates can reach up to 50 per-cent of eligible project costs. Higherrates may be possible for SMEs.

Cooperation between project part-ners, especially between enter-

prises and research institutions,is usually required. The federalgovernment periodically calls forR&D project proposals followed bya competition of best project ideas.

In addition, a number of nationalprograms without a specific tech-nological focus also exist, with theCentral Innovation Program forSMEs (ZIM) being the most promi-nent. Application for incentives

available under these programsis possible at all times and withoutany prior calls for proposals orapplication deadlines.

German Federal State FundingIn addition to programs run by thefederal government, each Germanstate has R&D grant programs inplace. Some states put particularfocus on specific industry clusters,but programs without a specifictechnological focus also exist. Coop-

eration between project partnersis not always necessary.

Further R&D ProjectSubsidy OptionsR&D loans can be an alternativeto R&D grants and entail severalspecific advantages: they are usuallynot attached to a specific technologyfield, application is possible at alltimes (no deadlines), and they cancover higher project costs.

R&D loans are provided by differ-ent governmental programs. Forinstance, the ERP Innovation Pro-gram offers 100 percent financingof eligible R&D project costs up toEUR 5 million.

Public (silent) partnerships are of-fered by both the KfW Bankengruppeand state-owned venture capital

companies to technically orientedcompanies. Direct shareholding bya public investment company is alsopossible. Conditions are negotiatedon a case-by-case basis.

Our Project-SpecificIncentives Services

Germany Trade & Invest helps toidentify suitable programs for theproject and region in question.Our experts provide assistance informulating a draft project outlinewhich normally serves as the firststep in the R&D incentives ap-plication process. Our managersinitiate meetings with the relevantprogram managing authorities andprovide advice during the entireapplication process.


Cash IncentivesR&D Incentives

Labor-Related IncentivesInterest-Reduced Loans

R&D Incentives


Public Guarantees

R&D Center Funding Opportunities:

Combining Cash Incentives and R&D Incentives

For setting up R&D centers in Germany, two funding measures cash incentivesand R&D incentives can be combined. Cash incentives are suitable for initialcapital expenditures, whereas R&D incentives cover specific R&D project runningexpenditures. The final decision on whether R&D centers are eligible for cashincentives lies with the respective state development bank.

Incentive example for combining cash incentives with R&D incentives:

Investment-related capitalexpenditure (max. 3-year time frame)

Specific R&D project expenditure(i.e. one R&D project, 2-year timeframe)1

Item Costs(in EUR)

Publicfunding

(in EUR)

Item Costs(in EUR)

Publicfunding

(in EUR)

Building 2.5 million 0.75 million(30%)2

Personnel 1.5 million 0.75 million(50%)3

Equipment4 2.5 million 0.75 million(30%)

Equipment4 0.5 million 0.25 million(50%)

Total 5.0 million 1.5 million Total 2.0 million 1.0 million

1 Expenditures may be duplicated with the definition of more than one specific R&D project.2 Incentive rate depends on: location, comp any size, investment volume.3 Incentive rate depends on: company size, R&D category, level of cooperation.4 Please note that the same equipment cannot be funded t wice. Funding can either come

from cash incentives or from R&D incentives.





Incentives Informationand Consulting Services

Investors can count on GermanyTrade & Invests financing andincentives consultancy servicesfrom project beginning to projectcompletion.

Our team of experts offers detailedinformation and reliable consult-ing services. Investors receive

firsthand information on availablepublic assistance for their projectfrom the outset.

Our services match investor de-mands at all stages of the invest-ment process. We focus on a com-prehensive incentives assessmentbased on the investors projectplan; followed by a detailed calcu-lation of possible support whicheases actual incentives negotia-tions with local authorities.

Where necessary, our expertsaccompany investors during thesenegotiations and offer assistancethroughout the application processuntil all incentives have been ap-proved.

Take advantage of our range of ser-vices and benefit from our compre-hensive knowledge.

Strategic Phase Decision Phase Implementation Phase

General Incentives Information Individual Incentives Check Individual Incentives Application

IncentivesOverview

DetailedIncentives

Assessment

IncentivesCalculation

Negotiation ofIncentives

Applicationof Investmentand Operating

Incentives

Approval ofIncentives

Month (est.): 2 5 8

This is an average time frame only. An additional six months should be added in cases where EU Commission incentives approval is required.

Germany Trade & Invests Incentives Information and Consulting Services

General Incentives InformationServices start with basic informa-tion regarding all types and sourcesof incentives programs in Germany.

According to scope and natureof the individual project, we helpidentify the most suitable incentivesprograms. Based on the investorproject plan we assess the possibleincentives level, comparing differentlocations within Germany.

Individual Incentives CheckOnce an investment site or a shortlist of sites has been identified by theinvestor, we calculate the amount of

possible incentives available. Thiscalculation is based on the plannedinvestment expenditure. We initi-ate meetings with the relevant localauthorities, negotiating possibleincentives volumes.

Individual Incentives ApplicationWhen the individual incentivespackage has been determined,applications must be submitted to

the granting authorities. Our teamoffers support throughout the entireapplication process; assisting inpreparing application forms, facili-tating and accelerating the incen-tives application process.


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Germany Trade &

Invest Helps YouGermany Trade & Invests teams ofindustry experts will assist you insetting up your operations in Ger-many. We support your project man-agement activities from the earlieststages of your expansion strategy.

We provide you with all of the indus-try information you need coveringeverything from key markets and re-lated supply and application sectorsto the R&D landscape. Foreign com-panies profit from our rich experi-ence in identifying the business

locations which best meet theirspecific investment criteria. We

help turn your requirements intoconcrete investment site proposals;providing consulting services to en-sure you make the right location de-cision. We coordinate site visits,meetings with potential partners,universities, and other institutesactive in the industry.

Our team of consultants is at handto provide you with the relevantbackground information on Germa-nys tax and legal system, industryregulations, and the domestic labormarket. Germany Trade & Investsexperts help you create the appro-

priate financial package for yourinvestment and put you in contact

with suitable financial partners.Incentives specialists provide youwith detailed information aboutavailable incentives, support youwith the application process, andarrange contacts with local econo-mic development corporations.

All of our investor-related servicesare treated with the utmost confi-dentiality and provided free ofcharge.

Germany Trade & Invest Support

Complete your project management needs from our rangeof investment and one-stop project consultancy services.

Project Management Assistance

Coordination andsupport of nego-tiations with localauthorities

Joint projectmanagement withregional develop-ment agency

Project partneridentificationand contact

Market entrystrategy support

Business oppor-tunity analysis andmarket research

Location Consulting /Site Evaluation

Final site

decision support

Site visit

organization

Site preselectionCost factor

analysis

Identification of

project-specificlocation factors

Accompanying in-centives applicationand establishmentformalities

Administrativeaffairs support

Organization ofmeetings withlegal advisors andfinancial partners

Project-relatedfinancing and incen-tives consultancy

Identification ofrelevant tax andlegal issues

Support Services

Decision & InvestmentStrategy Evaluation



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Imprint

Publisher & EditorGermany Trade and InvestGesellschaft fr Auenwirtschaftund Standortmarketing mbH

Friedrichstrae 6010117 BerlinGermanyT. +49 (0)30 200 099-555F. +49 (0)30 200 [email protected]

Executive BoardDr. Benno Bunse, Chairman/CEODr. Jrgen Friedrich, CEO

AuthorsIris Kirsch, Friedrich HenleInvestor Support Services, Financing & Incentives,Germany Trade & Invest

EditorWilliam MacDougall, Germany Trade & Invest

Layout

Germany Trade & Invest

PrintingDas Druckhaus Bernd Brmmer, Bonn

SupportPromoted by the Federal Ministry of Economics and Technology and the Federal

Government Commissioner for the New Federal States in accordance with aGerman Parliament resolution.

NotesGermany Trade & Invest, January 2013All data provided is based on the most current information availableat the time of publication. Germany Trade & Invest accepts no liabilityfor the actuality, accuracy, or completeness of the information provided.

Order Number13900

Contact


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Photo:www.istockphoto.com,

BrandonRose

Germany Trade & Invest

Friedrichstrae 6010117 BerlinGermany

T. +49 (0)30 200 099-555F. +49 (0)30 200 [email protected]

About Us

Germany Trade & Invest is the foreign trade and inward investment

agency of the Federal Republic of Germany. The organization

advises and supports foreign companies seeking to expand into

the German market, and assists companies established inGermany looking to enter foreign markets.

All inquiries relating to Germany as a business location are

treated confidentially. All investment services and related

publications are free of charge.

Promoted by the Federal Ministry of Economics and Technologyand the Federal Government Commissioner for the New FederalStates in accordance with a German Parliament resolution.

www.gtai.com

Documents

Facts Figures Incentives in Germany GTAI Eng 2013