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Germany updates regional investment program

Staff writer |
Germany's Federal Ministry for Economic Affairs and Energy (BMWi) has released the updated incentive map of Germany, representing areas defined by the Joint Task "Regional Economic Structure Improvement" (GRW) as targeted areas of improvement within the federal republic.

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The overall strength of Germany's economy has led to a re-think on the areas suitable for higher incentives. Eastern Germany, with the exception of Berlin and Leipzig, can incentivize investments by up to 15 percent up to the end of 2017 and up to 10 percent thereafter until the end of 2020, the end of the new period of validity for the new map.

In the Eastern German regions closest to the Polish border, incentives of up to 20% can be offered for the entire period. Moreover, small and medium enterprises get additional benefits, with medium-sized companies eligible for an extra 10 percent and small enterprises up to an extra 20 - so a small enterprise on the Polish border could incentivize investments by up to 40 percent overall.

"The new investment map shows two things quite clearly," said Iris Kirsch, Director of Investor Support Services at Germany Trade & Invest, Germany's inward investment promotion agency.

"Firstly that Germany, especially Eastern Germany, still offers remarkably good investment conditions considering the cautious global economic climate, and secondly that Germany's economy is continuing to stay strong through tougher times."

The map shows which areas in Germany are allowed to offer investment funding rates and which areas can offer which rates. Having been ratified by the EU, it was then returned to the federal and state governments for further ratification.

The new map will be valid from July 1st, 2014 until the end of 2020. It serves as a mechanism to promote new investment into structurally weaker areas of the country and thereby achieve the long-term aim of equalising economic conditions and infrastructural standards across the country.

In Western Germany, the strength of the economy in relation to Europe has meant that Hamburg and Baden-Württemberg are unable to incentivise any investments, while only certain parts of the rest of the region are set for 10 percent.

Germany Trade & Invest is the foreign trade and inward investment promotion agency of the Federal Republic of Germany. The organization advises foreign companies looking to expand their business activities in the German market. It provides information on foreign trade to German companies that seek to enter foreign markets.

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