Companies wishing to use distribution, franchising and agency arrangements need to ensure that the agreements they put into place are in accordance with EU laws and member state national laws. Council Directive 86/653/EEC establishes certain minimum standards of protection for self-employed commercial agents who sell or purchase goods on behalf of their principals. The Directive establishes the rights and obligations of the principal and its agents, the agent’s remuneration, and the conclusion and termination of an agency contract. It also establishes the notice to be given and indemnity or compensation to be paid to the agent. U.S. companies should be particularly aware that according to the Directive, parties may not derogate from certain requirements. Accordingly, the inclusion of a clause specifying an alternate body of law to be applied in the event of a dispute will likely be ruled invalid by European courts.
Key Link: Self Employed Commercial Agents
The European Commission’s Directorate General for Competition enforces legislation concerned with the effects on competition in the internal market of "vertical agreements." U.S. small- and medium-sized companies (SMEs) are often exempt from these regulations because their agreements likely would qualify as "agreements of minor importance," meaning they are considered incapable of impacting competition at the EU level but useful for cooperation between SMEs. Generally speaking, companies with fewer than 250 employees and an annual turnover of less than €50 million are considered small- and medium-sized. The EU has additionally indicated that agreements that affect less than 10 percent of a particular market are generally exempted (Commission Notice 2014/C 291/01).
Key Link: European Law
The EU also looks to combat payment delays. Directive 2011/7/EU covers all commercial transactions within the EU, whether in the public or private sector, primarily dealing with the consequences of late payment. Transactions with consumers, however, do not fall within the scope of this Directive. Directive 2011/7/EU entitles a seller who does not receive payment for goods and/or services within 30 days of the payment deadline to collect interest (at a rate of eight percent above the European Central Bank rate) as well as 40 Euro as compensation for recovery of costs. For business-to-business transactions a 60-day period may be negotiated subject to conditions. The seller may also retain the title to goods until payment is completed and may claim full compensation for all recovery costs.
Key Link: Late Payments
Companies’ agents and distributors can take advantage of the European Ombudsman when victim of inefficient management by an EU institution or body. Complaints can be made to the European Ombudsman only by businesses and other bodies with registered offices in the EU. The Ombudsman can act upon these complaints by investigating cases in which EU institutions fail to act in accordance with the law, fail to respect the principles of good administration, or violate fundamental rights. In addition, SOLVIT, a network of national centers, offers online assistance to citizens and businesses who encounter problems with transactions within the borders of the single market.
Anyone can open an office in Germany - irrespective of nationality or place of residence. There is no specific investment legislation in Germany, nor is there a minimum percentage of German shareholdings required for foreigners. Investors can choose the most suitable legal form; i.e., a corporation, a partnership or conduct business via a German branch office.
Foreign companies with a head office and registered business operations outside of Germany can establish a German branch office. This business form is suitable for a foreign company wishing to establish a presence in Germany for the purpose of initiating business and maintaining contacts with business partners.
For more information see below:
Data Privacy and Protection
The EU General Data Protection Regulation (GDPR), which governs how personal data of individuals in the EU may be processed and transferred, went into effect on May 25, 2018. GDPR is a comprehensive privacy legislation that applies across sectors and to companies of all sizes. It replaces the Data Protection Directive 1995/46. The overall objectives of the measures are the same – laying down the rules for the protection of personal data and for the movement of data.
GDPR is broad in scope and uses broad definitions. “Personal data” is any information that relates to an identified or identifiable living individual (data subject) such as a name, email address, tax ID number, online identifier, etc. “Processing” data includes actions such as collecting, recording, storing and transferring data.
A company that is not established in the Union may have to comply with the Regulation when processing personal data of EU and EEA residents (EEA countries are Norway, Lichtenstein and Switzerland):
a) If the company offers goods or services to data subjects in the EU; or,
b) If the company is monitoring data subjects’ behavior taking place within the EU.
The mere accessibility of a company’s website in the EU is insufficient to subject a company to GDPR, but other evidence of the intent to offer goods or services in the EU would be relevant.
As a general rule, companies that are not established in the EU but that are subject to GDPR must designate in writing an EU representative for purposes of GDPR compliance. There is an exception to this requirement for small scale, occasional processing of non-sensitive data.
Fines in case of non-compliance can reach up to 4% of the annual worldwide revenue or 20 million euros – whichever is higher. Companies of all sizes and sectors should consider GDPR as part of their overall compliance effort with assistance of legal counsel.
The European Commission and Data Protection Authorities are releasing official guidelines to help companies with their compliance process. These documents relate, for instance, to the role of the data protection officer, personal data breach notification, data protection impact assessment.
Note: the EU is currently updating its e-privacy legislation governing confidentiality of communications. This legislative instrument once enacted will add several requirements in addition to the GDPR. We encourage U.S. exporters to monitor this situation as it evolves through the EU legislative process.
For more information:
Full GDPR text
Official Press Release
European Commission guidance:
Transferring Customer Data to Countries outside the EU
The General Data Protection Regulation (GDPR) provides for the free flow of personal data within the EU but also for its protection when it leaves the region’s borders.
GDPR sets out obligations on data controllers (those in charge of deciding what personal data is collected and how/why it is processed), on data processors (those who act on behalf of the controller) and gives rights to data subjects (the individuals to whom the data relates). These rules were designed to provide a high level of privacy protection for personal data and were complemented by measures to ensure the protection is maintained when data leaves the region, whether it is transferred to controllers, processors or to third parties (e.g. subcontractors). EU legislators put restrictions on transfers of personal data outside of the EU, specifying that such data could only be exported if “adequate protection” is provided.
The European Commission (EC) is responsible for assessing whether a country outside the EU has a legal framework that provides enough protection for it to issue an “adequacy finding” to that country. The U.S. has never sought to be found adequate by the EC. This means that U.S. companies can only receive personal data from the EU if they:
For more information, consult the European Commission’s webpage on data transfers outside the EU https://ec.europa.eu/info/law/law-topic/data-protection/international-dimension-data-protection_en
The legal environment for data transfers to the United States continues to evolve. Companies that transfer EU citizen data to the United States as part of a commercial transaction should consult with an attorney, who specializes in EU data privacy law, to determine what options may be available for a transaction.
About the EU-U.S. Privacy Shield
The EU-U.S. Privacy Shield Framework was designed by the U.S. Department of Commerce and the European Commission to provide companies on both sides of the Atlantic with a mechanism to comply with EU data protection requirements when transferring personal data from the European Union to the United States in support of transatlantic commerce.
For more information on the EU-U.S. Privacy Shield
For more information about other mechanisms of transfer, please refer to:
Network and Information Systems (NIS) Security Directive
The European Network and Information Systems (NIS) Security Directive, applicable since 2016, sets a minimum baseline of requirements to ensure better protection of critical infrastructures in Europe. The legislation sets basic principles for Member States for common minimum capacity building and strategic cooperation. It also directs operators of essential services (OES) and digital service providers (DSP) to ensure they apply basic common security requirements.
DSPs are broadly defined to include: online/e-commerce marketplace (including app stores); online search engine (with the exclusion of search function limited to a specific website); and Cloud computing services. NIS systems are considered the e-communications network, connected devices and digital data. Among obligations for both OES and DSP are, to take technical and organizational measures to NIS risk management; to prevent and minimize the impact of NIS security incidents; to notify, without undue delay, incidents having a significant impact on the continuity of the essential services they provide.
More information on the legislation:
More information on the state of play of transposition in Member States:
The EU adopted the Cybersecurity Act in March 2019 to set up a mechanism to develop voluntary EU certification schemes for ICT security products, processes and services. The Cybersecurity Act does not set out requirements in details but lays out elements that should be in any given scheme to provide assurance on security requirements for all ICT products, services and processes. The areas that would benefit from certification schemes will either be proposed by the European Commission through an annual work program or by stakeholder group. Product manufacturers and service providers are encouraged to monitor the development of these schemes.
U.S. businesses looking to franchise within the European Union will likely find that the market is quite robust and friendly to franchise systems in general. There are a number of laws that govern the operation of franchises within the EU, but these laws are fairly broad and generally do not constrain the competitive position of U.S. businesses. The potential franchiser should take care to look not only at the EU regulations, but also at the local laws concerning franchising. More information on specific legislation can be found on the website of the European Franchise Federation.
The EU has yet to adopt legislation harmonizing the direct-selling of consumer products. However, there is a wide-range of EU legislation that impacts the direct marketing sector. Compliance requirements are stiffest for marketing and sales to private consumers. Companies need to focus, in particular, on the clarity and completeness of the information they provide to consumers prior to purchase and on their approaches to collecting and using customer data. The following gives a brief overview of the most important provisions flowing from EU-wide rules on distance-selling and on-line commerce. In addition, it is important for exporters relying on a direct-selling business model to ensure they comply with member state requirements.
Processing Customer Data
The EU has strict laws governing the protection of personal data, including the use of such data in the context of direct marketing activities. For more information on these rules, please see the Data Privacy section above.
Distance Selling Rules
In 2011, the EU overhauled its consumer protection legislation and merged several existing rules into a single rulebook - “the Consumer Rights Directive”. The provisions of this Directive have been in force since June 13, 2014. The Directive contains provisions on core information to be provided by traders prior to the conclusion of consumer contracts. It also regulates the right of withdrawal, includes rules on the costs for the use of means of payment and bans pre-ticked boxes.
The EU also adopted in March 2019 a set of two directives which govern EU-wide contract rules for the online sales of goods and the supply of digital content and services.
Alternative Dispute Resolution
In 2013, the EU adopted rules on Alternative Dispute Resolution which provide consumers the right to turn to quality alternative dispute resolution entities for all types of contractual disputes including purchases made online or offline, domestically or across borders. A specific Online Dispute Resolution Regulation, operational in January 2016, sets up an EU-wide online platform to handle consumer disputes that arise from online transactions.
Consumer Affairs Homepage
In December 2015, the European Commission released two draft Directives, one on “contracts for the supply of digital content” and another on “contracts for the online and other distance sales of goods.” This package addresses the legal fragmentation and lack of clear contractual rights for faulty digital content and distance selling across the EU. The package only addresses B2C contracts, although its scope uses a very broad definition of both digital content (including music, movies, apps, games, films, social media, cloud storage services, broadcasts of sport events, visual modelling files for 3D printing) and distance selling goods so as to cover Internet of Things (such as connected households appliances and toys). It also applies to transactions whether in the context of a monetary transaction or in exchange of (personal) consumer data. Healthcare, gambling and financial services are excluded. The package is currently under scrutiny at both the European Parliament and Council.
Consumer Affairs Homepage
Distance Selling of Financial Services
Financial services are the subject of a separate directive that came into force in June 2002 (2002/65/EC). This piece of legislation amended three prior existing Directives and is designed to ensure that consumers are appropriately protected with respect to financial transactions taking place where the consumer and the provider are not face-to-face. In addition to prohibiting certain abusive marketing practices, the Directive establishes criteria for the presentation of contract information. Given the special nature of financial markets, specifics are also laid out for contractual withdrawal.
Key Link: Distance Marketing
Direct Marketing over the Internet
The e-commerce Directive (2000/31/EC) imposes certain specific requirements connected to the direct marketing business. Promotional offers must not mislead customers and the terms that must be met to qualify for them have to be clear and easily accessible. The Directive stipulates that marketing e-mails must be identified as such to the recipient and requires that companies targeting customers on-line must regularly consult national opt-out registers where they exist. When an order is placed, the service provider must acknowledge receipt quickly and by electronic means, although the Directive does not attribute any legal effect to the placing of an order or its acknowledgment: this is a matter for national law. Vendors of electronically supplied services (such as software, which the EU considers a service and not a good) must also collect value added tax (see Electronic Commerce section below). The European Commission has performed a stakeholder’s consultation and is currently assessing the opportunity to propose a revision of the e-commerce Directive. See Data Privacy Section above.
Key Link: Direct Marketing over the Internet
Most German enterprises use direct marketing to sell their products and services. The most frequently used formats are email and Internet marketing, telephone marketing, direct mail and inserts in publications. It is important to know the pitfalls of using direct marketing as a selling tool in Germany. Data protection and privacy laws are stringent, and consumer protection guidelines and competitive advertising are also highly regulated. Companies should consult with a lawyer before raising, storing or processing any sort of data in Germany. Other potential challenges regard the laws pertaining to unfair competition and rebates.
Dealing with joint ventures ranks among the most difficult jobs under German competition law. In Germany, joint venture legislation falls under the purview of the Federal Cartel Office (Bundeskartellamt) The law requires that a joint venture must exercise “genuine entrepreneurial” activities. Under German law, this means:
The Bundeskartellamt is required to prohibit a merger if it is, "expected to create or strengthen a dominant position.” Market dominance is defined as an undertaking which either has no competitors or is not exposed to any substantial competition or has a paramount market position in relation to its competitors.
German antitrust law does not, in the absence of a dominant market position, restrict the owner’s freedom to use her/his industrial property rights, including the exploitation of a patented innovation.
Selling to German government entities is not an easy process. German government procurement is formally non-discriminatory and compliant with the WTO Government Procurement Agreement (GPA) and EU-wide legislation under the EU Public Procurement Directives.. That said, it is a major challenge to compete head-to-head with major German or other EU suppliers who have established long-term ties with purchasing entities.
Government procurement in Europe is governed by both international obligations under the WTO Government Procurement Agreement (GPA) and EU-wide legislation under the EU Public Procurement Directives. U.S.-based companies are allowed to bid on public tenders covered by the GPA, while European subsidiaries of U.S. companies may bid on all public procurement contracts covered by the EU Directives in the European Union.
The EU directives on public procurement have been revised and legislation on concession has also been adopted. Member States were required to transpose the provisions of the new directives by April 16, 2016. The four relevant directives:
The EU has three remedy directives imposing common standards for all Member States to abide by in case bidders identify discriminatory public procurement practices.
Electronic versions of the procurement documentation must be available through an internet URL immediately upon publication of the Official Journal of the European Union (OJEU) contract notice. Full electronic communication (with some exceptions) are mandatory for all public contracts since October 2018. Central purchasing bodies are required to publish their contracts and requests for tenders since April 2017.
Electronic invoicing (e-invoicing) was introduced beginning of the 3rd quarter of 2018, based on the requirement set forth in Directive 2014/55/EU. The Directive makes the receipt and processing of electronic invoices in public procurement obligatory. Standards for e-invoicing are being developed by the European Committee for Standardization (CEN).
There are restrictions for U.S. suppliers in the EU utilities sector, both in the EU Utilities Directive and in EU coverage of the GPA. Article 85 of Directive 2014/25 allows EU contracting authorities to either reject non-EU bids where the proportion of goods originating in non-EU countries exceeds 50 percent or give preference to the EU bid if prices are equivalent (meaning within a three percent margin). Moreover, the Directive allows EU contracting authorities to retain the right to suspend or restrict the award of service contract to undertakings in third countries where no reciprocal access is granted.
There are also restrictions in the EU coverage of the GPA that apply specifically to U.S.-based companies. U.S. companies are not allowed to bid on works and services contracts procured by sub-central public contracting authorities in the following sectors:
Distribution channels are varied and similar to the United States. There are certain restrictions, however, concerning multi-level networking systems, i.e., so-called snowball or pyramid distribution systems. More information can be found here.
Most international express delivery companies are active in Germany. Large players include DHL and Hermes (both headquartered in Germany), FedEx and UPS. These companies ship domestically and internationally, provide a wide range of delivery options and prices and have grown significantly as a result of e-commerce. The German express delivery industry had 238,600 employees in 2018 and more than 3.5 billion packages were shipped.
Success in the German market, as elsewhere around the world, requires long-term commitment to market development and sales backup, especially if U.S. companies are to overcome the geographic handicap with respect to European competitors. Germans at times perceive U.S. suppliers as tending to process a U.S. domestic order before taking care of an export sale, or being quick to bypass a local distributor to deal directly with its customer. Some German entrepreneurs with selective experience with U.S. companies are skeptical about their long-term commitment and after-sales support. U.S. firms entering Germany today are generally aware of the factors that make for a successful export relationship and are ready to establish a credible support network. However, U.S. firms should be ready to address any lingering doubts from prospective German clients/partners.
Creating a Digital Single Market (DSM) is one of the ten priorities of the European Commission (EC). The overall objective is to bring down barriers, regulatory or otherwise, to unlock online opportunities in Europe, from e-commerce to e-government. By doing so, the EU hopes to have a way with its currently 28 member countries and create one borderless market with harmonized legislation and rules for the benefit of businesses and consumers alike throughout Europe.
The European Commission set out a high-level vision in its May 6, 2015 DSM Strategy which was followed by a number of specific and concrete legislative proposals and policy actions to be developed in 2015-2016. They are broad reaching and include reforming e-commerce sector, VAT, copyright, consumer protection and data privacy laws. DSM-related legislation will have a broad impact on U.S. companies doing business in Europe.
The three main pillars of the strategy are:
II: digital networks and services
III: growth potential of the European Digital Economy
The German regulatory environment is following the European Union “Electronic Commerce Directive (2000/31/EC) as mentioned in the section “Direct Marketing" above, providing rules for online services in the EU. It requires providers to abide by rules in the country where they are established (country of origin). Online providers must respect consumer protection rules such as indicating contact details on their website, clearly identifying advertising and protecting against spam. The Directive also grants exemptions to liability for intermediaries that transmit illegal content by third parties and for unknowingly hosting content. The European Commission released a work plan in 2012 in order to facilitate cross-border online services and reduce barriers and released a report on implementation of the action plan in 2013.
Internal Market E-Commerce
The EU applies Value Added Tax (VAT) to sales by non-EU based companies of Electronically Supplied Services (ESS) to EU-based non-business customers. U.S. companies that are covered by the rule must collect and submit VAT to EU tax authorities. From 1 January 2015, all supplies of telecommunications, broadcasting and electronic services are taxable at the place where the customer is located. In the case of businesses this means either the country where a business is registered or the country where it has fixed premises receiving the service. In the case of consumers, it is where they are registered, have their permanent address, or usually live.
As part of the legislative changes of 2015, the Commission has launched the “Mini One Stop Shop (MOSS)” scheme, the use of which is optional. It is meant to facilitate the sales of ESS from taxable to non-taxable persons (B2C) located in Member States in which the sellers do not have an establishment to account for the VAT.
This scheme allows taxable persons (sellers) to avoid registering in each Member State of consumption. A taxable person who is registered for the mini One Stop Shop in a Member State (the Member State of Identification) can electronically submit quarterly mini One Stop Shop VAT returns detailing supplies of ESS to non-taxable persons in other Member States (the Member State(s) of consumption), along with the VAT due.
The most important pieces of legislation on VAT are the EU VAT Directive 2006/112/EC and its Implementing Regulation 282/2011.
Further information relating to VAT on ESS: https://ec.europa.eu/taxation_customs/business/vat/telecommunications-broadcasting-electronic-services_en#infosel
In 2015, the European Union launched an ambitious overhaul (the so-called Digital Single Market Strategy) of policy and legislation relevant to the digital economy. The overall objective was to bring down barriers, regulatory or otherwise, and to unlock online opportunities in Europe. E-commerce was a priority area, to ensure better access for consumers and businesses to online goods and services across Europe and to remove key differences between the online and offline worlds.
New pieces of legislation have been adopted to facilitate cross-border portability of online content services, increase transparency of cross-border parcel delivery, and update and harmonize contract rules for online sales of goods and supply of digital content and services. For more information: Digital Single Market
The Electronic Commerce Directive (2000/31/EC) provides rules for online services in the EU. It requires providers to abide by rules in the country where they are established (country of origin). Online providers must respect consumer protection rules such as indicating contact details on their website, and clearly identifying advertising and protecting against spam. The Directive also grants exemptions to liability for intermediaries that transmit illegal content by third parties and for unknowingly hosting content.
Comprehensive Market Research on e-commerce in the EU is available upon request.
Key Link: eCommerce
eCommerce in Germany
Germany has one of the largest e-commerce markets in Europe. The number of e-commerce consumers, internet penetration and average spent per year is above the European average. In 2018 total sales are estimated to have reached USD 109.8 billion, wich is a 10% growth compared to 2017. The estimated average spent online per person per year is USD 867. In 2018, Germany had an online population of 72.2 million people who were aged 15 and older.
German clients are rather risk-averse and expect high quality products. By law, consumers have the right to return online purchases within 14 days without explanation, and there is indeed a high product return rate. Websites and online stores are expected to be in German language.
The most popular products purchased online include clothing, electronics, tickets and books. 87% of the German population uses social media with Facebook, Youtube and Instagram being the most popular tools, thereby rending social media a valuable marketing tool.
Popular eCommerce Sites
According to statistics from 2018, the ten largest online retailers in Germany are: Amazon (USD 12,868 million), Otto (USD 3,555 million), Zalando (USD 2,296 million), Mediamarkt (USD 959 million), Notebooksbilliger.de (USD 918 million), Lidl (USD 823 million), Bonprix (USD 702 million), Cyberport (USD 626 million), Alternate (USD 586 million), Conrad (USD 580 million).
Data from the Ecommerce Foundation shows that Paypal is the most popular method of online payment in Germany (52 percent of Internet users), followed by invoice (26 percent), debit or credit cards (12 percent), direct debiting (6 percent) and cash on delivery (1 percent). Online customers have the right to cancel orders and return goods or services within 14 days, for any reason and with no justification. As a result, Germany is known for its high return rate, particularly in the fashion industry.
The strong e-commerce market in Germany can be attributed to the considerable proportion of the population who own smartphones (nearly 80 percent). In 2017, retail sales conducted via mobile devices in Germany were worth an estimated USD 24 billion, 35 percent of this coming from retail ecommerce sales, with clothing, books, electronics and tickets being the most commonly purchased items. This growth is likely to continue as retailers improve their mobile websites and provide even more convenient ways of shopping on mobile devices.
The EU’s VAT system is semi-harmonized. While the guidelines are set out at EU level, the implementation of VAT policy is the prerogative of Member States. The EU VAT Directive allows Member States to apply a minimum 17 percent VAT rate. However, they may apply reduced rates for specific goods and services or temporary derogations. Therefore, the examination of VAT rates by Member State is strongly recommended. These and other rules are laid out in the VAT Directive.
The EU applies Value Added Tax (VAT) to sales by non-EU based companies of Electronically Supplied Services (ESS) to EU-based non-business customers. U.S. companies that are covered by the rule must collect and submit VAT to EU tax authorities. From 1 January 2015, all supplies of telecommunications, broadcasting and electronic services are taxable at the place where the customer resides. In the case of businesses this means either the country where it is registered or the country where it has fixed premises receiving the service. In the case of consumers, it is where they are registered, have their permanent address, or usually live.
As part of the legislative changes of 2015, the Commission launched the Mini One Stop Shop (MOSS) scheme, the use of which is optional. It is meant to facilitate the sales of ESS from taxable to non-taxable persons (B2C) located in Member States in which the sellers do not have an establishment to account for the VAT. In 2021, this service will be extended to cover online sales of goods and services other than ESS.
This (optional) plan allows taxable persons (sellers) to avoid registering in each Member State of consumption. A taxable person who is registered for the Mini One Stop Shop in a Member State (the Member State of Identification) can electronically submit quarterly Mini One Stop Shop VAT returns detailing supplies of ESS or other to non-taxable persons in other Member States (the Member State(s) of consumption), along with the VAT due. The most important pieces of legislation on VAT are the EU VAT Directive 2006/112/EC, as amended, and its Implementing Regulation 282/2011, as amended
Further information relating to VAT on ESS:
VAT in Germany
The standard VAT rate in Germany is 19 percent (below the European average). A reduced 7 percent VAT rate applies to some consumer goods and everyday services (food, newspapers, local public transport, hotel stays). Some services (such as bank and health services or community work) are VAT exempt.
Vendors who are not established in the European Union and who make sales that are subject to German VAT must register for tax purposes in Germany. The tax office Bonn-Innenstadt (Service@FA-5205.fin-nrw.de) is responsible for assessing and collecting VAT for U.S. vendors who are not established in Germany.
Under certain conditions international travelers can receive VAT refunds if they are not a resident of the European Union: Tax-free shopping
Few countries in the world can match Germany when it comes to leading international trade fairs. Such a reputation should be no surprise given that the trade fair concept was born in Germany during the Middle Ages. Today, Germany hosts a major world-class trade event in virtually every industry sector, attracting buyers from around the world. Trade fairs thrive in Germany because they are true business events where contracts are negotiated and deals are consummated. U.S. exhibitors at German fairs should be prepared to take full advantage of the business opportunities presented at these events. While U.S. exhibitors and visitors can conclude transactions, all attendees can use major German trade fairs to conduct market research, see what their worldwide competition is doing, and test pricing strategies. Finally, German fairs attract buyers from throughout the world, allowing U.S. exhibitors to conduct business here with buyers from across Europe, Asia, Africa, Latin America, the Middle East, as well as with other U.S. companies.
German trade fairs, in general, attract impressive numbers of visitors and exhibitors. This reality confirms the conviction that there is no other venue where an American company can get so much product exposure for its marketing dollar. Trade fairs also provide a U.S. company interested in entering Germany with the opportunity to research its market and the potential of its product properly before making a business decision.
In addition to exhibiting at major German trade fairs, advertising plays a central role in most companies’ broad-based marketing programs. Regulation of advertising in Germany is a mix between basic rules and voluntary guidelines developed by the major industry associations. The “Law Against Unfair Competition” established legal rules at the beginning of the 20th Century. Although it has been modified over time, this law continues to be valid today. The law allows suits to be brought if advertising "violates accepted mores."
Many advertising practices that are common in the United States, such as offering premiums, are not allowed in Germany. Any planned advertising campaigns should be discussed with a potential business partner or an advertising agency in Germany. The German association of advertising agencies can be found online.
There are numerous technical or specialized periodicals and websites that deal with all aspects of technology and doing business in Germany. In addition, Germany has a well-developed array of newspapers and magazines which offer the opportunity to gather information and advertise products and services.
Laws against misleading advertisements differ widely from member state to member state within the EU. To respond to this issue in the internal market, the Commission adopted a directive, in force since October 1986, to establish minimum and objective criteria regarding truth in advertising. The Directive was amended in October 1997 to include comparative advertising. Under the Directive, misleading advertising is defined as any "advertising which in any way, including its presentation, deceives or is likely to deceive the persons to whom it is addressed or whom it reaches and which, by reason of its deceptive nature, is likely to affect their economic behavior or which for those reasons, injures or is likely to injure a competitor." Member States can authorize even more extensive protection under their national laws.
Comparative advertising, subject to certain conditions, is defined as "advertising which explicitly or by implication identifies a competitor or goods or services of a competitor." Member States can, and in some cases have, restricted misleading or comparative advertising.
The EU’s Audiovisual Media Services Directive (AMSD) lays down legislation on broadcasting activities allowed within the EU. Since 2009, the rules allowing for U.S.-style product placement on television and the three-hour/day maximum of advertising has been lifted. However, a 12-minute/hour maximum remains. The AMSD is currently under revision. The European Commission is aiming to extend the scope of the Directive to video-sharing platforms which tag and organize the content. The Commission is also aiming to provide more flexibility about the 12-minute/hour maximum restriction. Children’s programming is subject to a code of conduct that includes a limit on junk food advertising to children. Following the adoption of the 1999 Council Directive on the Sale of Consumer Goods and Associated Guarantees, product specifications, as laid down in advertising, are considered as legally binding on the seller.
The EU adopted Directive 2005/29/EC concerning fair business practices in a further attempt to tighten consumer protection rules. These rules outlaw several aggressive or deceptive marketing practices such as pyramid schemes, "liquidation sales" when a shop is not closing down, and artificially high prices as the basis for discounts in addition to other potentially misleading advertising practices. Certain rules on advertising to children are also set out.
Unfair Commercial Practices Directive
Audio video Media Services
The advertising of medicinal products for human use is regulated by Council Directive 2001/83/EC, as amended by Directive 2004/27/EC. The advertising of medicinal products is forbidden if market authorization has not yet been granted or if the product in question is a prescription drug. Mentioning therapeutic indications where self-medication is not suitable is not permitted, nor is the distribution of free samples to the general public. The text of the advertisement should be compatible with the characteristics listed on the product label and should encourage rational use of the product. The advertising of medicinal products destined for professionals should contain essential characteristics of the product as well as its classification. Inducements to prescribe or supply a medicinal product are prohibited, and the supply of free samples is restricted.
Key Link: Health and Medicine
Nutrition & Health Claims:
On July 1, 2007, regulation 1924/2006 set into force EU-wide conditions for the use of nutrition claims such as “low fat” or “high in vitamin C” and health claims such as “helps lower cholesterol.” The regulation applies to any food or drink product produced for human consumption that is marketed in the EU. Only foods that fit a certain nutrient profile (below certain salt, sugar and/or fat levels) are allowed to carry claims. Nutrition and health claims are only allowed on food labels if they are included in one of the EU’s positive lists. Food products carrying claims must comply with the provisions of nutritional labeling Directive 90/496/EC and its amended version Directive 1169/2011.
In December 2012, a list of approved functional health claims went into effect. The list includes generic claims for substances other than botanicals, which will be evaluated at a later date. Disease risk reduction claims and claims referring to the health and development of children require an authorization on a case-by-case basis, following the submission of a scientific dossier to the European Food Safety Authority (EFSA). Health claims based on new scientific data will have to be submitted to EFSA for evaluation but a simplified authorization procedure has been established.
The development of nutrient profiles, originally scheduled for January 2009, has been delayed. Nutrition claims can fail one criterion, i.e. if only one nutrient (salt, sugar or fat) exceeds the limit of the profile, a claim can still be made provided the high level of that particular nutrient is clearly marked on the label. For example, a yogurt can make a low-fat claim even if it has high sugar content but only if the label clearly states “high sugar content.” A European Union Register of nutrition claims has been established and is updated regularly. Health claims cannot fail any criteria. Detailed information on the EU’s Nutrition and Health Claims policy can be found on the USEU/FAS website and in the USDA Food and Agricultural Import Regulations and Standards EU 28 2014
Key Link: NUH Claims
Food Information to Consumers:
On July 1, 2007, a regulation on nutrition and health claims entered into force. Regulation 1924/2006 sets EU-wide conditions for the use of nutrition claims such as “low fat” or “high in vitamin C” and health claims such as “helps lower cholesterol.” The regulation applies to any food or drink product produced for human consumption that is marketed in the EU. Only foods that fit a certain nutrient profile (below certain salt, sugar and/or fat levels) can carry claims. Nutrition and health claims are only allowed on food labels if they are included in one of the EU’s positive lists. Food products carrying claims must comply with the provisions of nutritional labeling Directive 90/496/EC and its amended version Directive 1169/2011.
In December 2012, a list of approved functional health claims went into effect. The list includes generic claims for substances other than botanicals which will be evaluated at a later date. Disease risk reduction claims and claims referring to the health and development of children require an authorization on a case-by-case basis, following the submission of a scientific dossier to the European Food Safety Authority (EFSA). Health claims based on new scientific data will have to be submitted to EFSA for evaluation, but a more simplified authorization procedure has been established.
The development of nutrient profiles, originally scheduled for January 2009, has been delayed. The original proposal has been withdrawn. In October 2015 the European Commission released a new roadmap on the potential development of nutrient profiles and botanicals. To obtain stakeholders’ inputs, two consultations and an external study was launched in mid-2017. The European Commission is now assessing the opportunity to proceed with a proposal and then potentially draft it. Nutrition claims, in place since 2006, can fail one criterion, i.e. if only one nutrient (salt, sugar or fat) exceeds the limit of the profile, a claim can still be made provided the high level of that particular nutrient is clearly marked on the label. For example, a yogurt can make a low-fat claim even if it has high sugar content but only if the label clearly states, “high sugar content.” A European Union Register of nutrition claims has been established and is updated regularly. Health claims cannot fail any criteria.
Detailed information on the EU’s Nutrition and Health Claims policy can be found on the USEU/FAS website at USEU/FAS website and in the USDA Food and Agricultural Import Regulations and Standards EU 28 2017
Key Link: EU Register of Nutrition and Health Claims
In 2015, the EU adopted a new regulation on novel foods (2015/2283) amending the provision of food information to consumers (1169/2011). Novel foods and food ingredients must not present a danger for the consumer or mislead him and should not differ from the ingredients that they are intended to replace to such an extent that normal consumption would represent a nutritional disadvantage for the consumer. It is important to mention that the European Commission may decide, on its own initiative or upon a request by a Member State, by means of implementing acts (a sort of decree), whether or not a particular food falls within the definition of novel food. More information can be found on the Commission's website. Most provisions of this new Novel Foods Regulation become applicable on January 1, 2018.
Detailed information on the EU’s new food labeling rules can be found on the USEU/FAS website at EU Labelling Requirements and in the USDA Food and Agricultural Import Regulations and Standards EU 28 2017
Key link: Provision on Food Information
Directive 2002/46/EC harmonizes the rules on labeling of food supplements and introduces specific rules on vitamins and minerals in food supplements. Ingredients other than vitamins and minerals are still regulated by Member States.
Regulation 1925/2006, applicable as of July 1, 2007, harmonizes rules on the addition of vitamins and minerals to foods. The regulation lists the vitamins and minerals that may be added to foods. This list was most recently revised in 2014. A positive list of substances other than vitamins and minerals has not been established yet, although it is being developed. Until then, member state laws will govern the use of these substances.
Key Link: Labelling Nutrition Supplements
The EU Tobacco Advertising Directive bans tobacco advertising in printed media, radio, and internet as well as the sponsorship of cross-border events or activities. Advertising in cinemas and on billboards or merchandising is allowed, though these are banned in many Member States. Tobacco advertising on television has been banned in the EU since the early 1990s and is governed by the Audiovisual Media Services Directive. A 2016 revision to the legislation includes the requirement for bigger, double-sided health pictorial warnings on cigarette packages and possibility for plain packaging along with health warnings, tracking systems.
Key link: Tobacco Products
German customers are often very price-sensitive. Consequently, price is an importantant competitive factor, but quality, timely delivery and service remain equally important, especially in B2B relations.
The German commercial customer expects to be able to pick up the telephone, talk to his or her dealer and have replacement parts or service work immediately available. American exporters should avoid appointing distributors with impossibly large geographic areas, without firm commitments regarding parts inventories or service capabilities, and without agreements on dealer mark-ups.
Conscious of the discrepancies among Member States in product labeling, language use, legal guarantee and liability, the redress of which inevitably frustrates consumers in cross-border shopping, the EU institutions have launched a number of initiatives aimed at harmonizing national legislation. Suppliers within and outside the EU should be aware of existing and upcoming legislation affecting sales, service and customer support.
Under the 1985 Directive on Liability of Defective Products, amended in 1999, the producer is liable for damage caused by a defect in his product. The victim must prove the existence of the defect and a causal link between defect and injury (bodily as well as material). A reduction of liability of the manufacturer is granted in cases of negligence on the part of the victim. The first step in the review process of this law was launched at the end of 2016.
Key link: Liability of Defective Products
The 1992 General Product Safety Directive introduced a general safety requirement at the EU level to ensure that manufacturers only place safe products on the market. It was revised in 2001 to include an obligation on the producer and distributor to notify the Commission in case of a problem with a given product, provisions for its recall, the creation of a European Product Safety Network, and a ban on exports of products to third countries that are not deemed safe in the EU. The legislation is still undergoing review.
Key link: Product Safety Legislation
Legal Warranties and After-sales Service
Under the 1999 Directive on the Sale of Consumer Goods and Associated Guarantees, professional sellers are required to provide a minimum two-year warranty on all consumer goods sold to consumers (natural persons acting for purposes outside their trade, businesses or professions), as defined by the Directive. The remedies available to consumers in case of non-compliance are:
Other issues pertaining to consumers’ rights and protection, such as the New Approach Directives, CE marking, quality control and data protection are dealt with in the Trade Regulations section of this report.
Key link: Sales and Guarantees
Protecting Your Intellectual Property in the EU:
Several general principles are important for effective protection of intellectual property (“IP”) rights in the EU. First, it is important to have an overall strategy to protect your IP. Second, IP may be protected differently in the EU than in the United States. Third, rights must be registered and enforced in the EU under local laws. For example, your U.S. trademark, design and patent registrations will not protect you in the EU without further registrations in the corresponding regional or local level.
Most copyrighted works created in the US will be automatically protected in the EU since the moment of creation or publication according to international agreements However, the extension of said protection will vary according to the laws of each EU Member State. Indeed, protection against unauthorized use in a particular country depends, basically, on the national laws of that country.
Obtaining patent grants in the EU is based on a first-to-file basis. Similarly, most trademark and design rights are based on a first-to-file registration system, so you should consider how to obtain patent, design or trademark protection before introducing your products or services to the EU market. It is vital that companies understand that intellectual property rights are primarily private rights and that the U.S. government cannot enforce them for private individuals in the EU. It is the responsibility of the rights holders to register, protect, and enforce their rights where relevant, retaining their own counsel and advisors. Companies may wish to seek advice from local attorneys or IP consultants who are experts in EU law. The U.S. Commercial Service can provide a list of local lawyers upon request.
While the U.S. government stands ready to assist, there is little we can do if the rights holders have not taken these fundamental steps necessary to securing and enforcing their IP in a timely fashion. Moreover, in many countries, rights holders who delay enforcing their rights on a mistaken belief that the U.S. government can provide a political resolution to a legal problem may find that their rights have been eroded or abrogated due to legal doctrines such as statutes of limitations, laches, estoppel, or unreasonable delay in prosecuting a law suit. In no instance should U.S. government advice be regarded as a substitute for the responsibility of a rights holder to promptly pursue its case.
It is always advisable to conduct due diligence on potential partners. A good partner is an important ally in protecting IP rights. Consider carefully, however, whether to permit your partner to register your IP rights on your behalf. Doing so may create a risk that your partner will list itself as the IP owner and fail to transfer the rights should the partnership end. Keep an eye on your cost structure and reduce the margins (and the incentive) of would-be bad actors. Projects and sales in the EU require constant attention. Work with legal counsel familiar with the EU laws to create a solid contract that includes non-compete clauses, and confidentiality/non-disclosure provisions.
It is also recommended that small and medium-size companies understand the importance of working together with trade associations and organizations to support efforts to protect IP and stop counterfeiting. There are a number of these organizations, both EU or U.S.-based. These include:
A wealth of information on protecting IP is freely available to U.S. rights holders. Some excellent resources for companies regarding intellectual property include the following:
In any foreign market companies should consider several general principles for effective protection of their intellectual property. For background, please link to our article on Protecting Intellectual Property (at https://www.uscib.org/register-and-apply-ud-859/) and Stopfakes.gov for more resources).
IP Attaché Contact
U.S. Mission to the European Union, Belgium
Product safety testing and certification is mandatory for the EU market. U.S. manufacturers and sellers of goods have to perform due diligence in accordance with mandatory EU legislation prior to exporting.
Companies interested in taking over German firms should always conduct their own due diligence before entering into business ventures. One of the Commercial Service Programs, the International Company Profile, has been designed to support due diligence processes. All major consulting companies offer due diligence services, and most large U.S. accounting or consulting firms have subsidiaries in Germany
Business service providers active in Germany can be viewed on the website maintained by the Commercial Service at the U.S. Embassy in Germany.
Local service providers focusing on EU law, consulting, and business development can be viewed on the website maintained by the Commercial Service at the U.S. Mission to the European Union.
Bundesverband der Deutschen Industrie e.V. (BDI)
(Federation of German Industries)
Deutscher Industrie und Handelskammertag (DIHK)
(Federation of German Chambers of Industry and Commerce)
Bundesverband Grosshandel, Aussenhandel, Dienstleistungen e.V.
(Federation of German Wholesale, Foreign Trade and Services)
Zentralverband Elektrotechnik- und Eletronikindustrie e.V. (ZVEI)
(German Electrical and Electronic Manufacturers Association)
Verband Deutscher Maschinen- und Anlagenbau e.V. (VDMA)
(German Association of Machinery and Plant Manufacturers)
Centralvereinigung Deutscher Wirtschaftsverbaende fuer Handelsvermittlung und Vertrieb (CDH) (National Association of German Commercial Agencies and Distributors)
For industry-specific business associations, please visit our leading sectors section, which lists key contacts and resources by industry sector.
We are not aware of any limitations on manufacturing or service sectors that prohibit non-Germans from owning or selling these businesses in Germany.
Coordination of the laws of the Member States relating to self-employed commercial agents (Council Directive 86/653/EEC)
Agreements of Minor importance which do not appreciably restrict Competition under Article 101(1) of the Treaty establishing the European Community
Directive on Late Payment
EU's Data Protection Directive (95/46/EC)
EU's General Data Protection Regulation (GDPR)(2016/676/EC)
Information on contracts for transferring data outside the EU
EU-U.S. Privacy Shield
EU Data Protection Home page
Consumer Rights Directive
E-commerce Directive (2000/31/EC)
EU VAT Directive 2006/112/EC and its Implementing Regulation 282/2011
The Unfair Commercial Practices Directive /
Nutrition and Health claims made on foods- Regulation 1924/2006
Regulation on Food Information to Consumers
EU-28 FAIRS EU Country Report on Food and Labeling requirements
Health & Nutrition Claims
Legal Warranties and After-Sales Service
European Patent Office (EPO)
EU Intellectual Property Office (EUIPO)
World Intellectual Property Organization (WIPO) Madrid
EU Public Procurement
Local Professional Services
Contacts in Germany
Federal Ministry of Economics and Technology
Bundesministerium fuer Wirtschaft & Technologie
Germany Trade and Invest
Federal Ministry of Finance
Bundesministerium der Finanzen
Country Market Research Firms
It would exceed the scope of this guide to list even only the major market research or consultant companies. Most of these firms belong to one or both of the following associations and can be contacted through these:
Bundesverband Deutscher Unternehmensberater e.V. (BDU)
(Federal Association of German Consultants)
Arbeitskreis Deutscher Markt- und Sozialforschungsinstitute e.V. (ADM)
(Business Association for German market and social research)
Country Commercial Banks
There are numerous domestic and foreign banks represented in Germany; among the largest German institutions are:
Deutsche Bank AG
Deutsche Postbank AG
U.S. Embassy Trade Personnel
United States Embassy, Berlin
U.S. Department of Commerce, International Trade Administration
U.S. Department of State
USDA - Foreign Agricultural Service, Agricultural Export Services Division. The website has trade and production statistics, exporter assistance information, marketing information, trade policy news and links to the attaché reports.
U.S. Department of the Treasury
Office of the U.S. Trade Representative
German Missions in the United States
CMA - German Agricultural Marketing Board, North American Office
German American Chamber of Commerce, Inc. (Headquarters)
Representative of German Industry and Trade
U.S. Commercial Service Germany’s trade specialists can help you identify trade opportunities, find local trading partners, launch your company and obtain market research reports.
U.S. Government Export Portal
As EU member states harmonize their regulations and increase their economic integration, a direct connection to the U.S. Commercial Service at the U.S. Mission to the European Union can be the key to success in the EU market.
American Chamber of Commerce in Germany
Association of American German Business Clubs e.V.
American German Business Club Berlin
The Foreign Agricultural Service website has trade and production statistics, exporter assistance information, marketing information, trade policy news and links to the attaché reports.
Agricultural Affairs Office
14191 Berlin, Germany
Tel: +49 30 8305-1150
The Office of Agricultural Affairs at the U.S. Mission to the European Union has a very comprehensive website on EU food laws, import requirements and duties and quotas.
Statistical data on trade between the United States and Germany can be found online.
The Deutsche Bundesbank (Germany’s central bank) provides information and key indicators on Germany’s economy.
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