German trade with the USA
With the USA being one of the world’s top exporting nations and Germany being the top exporting nation in the European Union, the two countries have a vibrant and dynamic bilateral trading relationship. German trade with the USA presents potential for any small, medium or larger sized business.
Germany is the USA’s window to the European Union and the USA’s top trading partner within the EU. In turn, the USA is Germany’s most prominent trading partner outside the European Union. Increased efforts to boost bilateral cooperation between the USA and the European Union will come to benefit both Germany and the USA.
A. Trade with USA
In 2013, bilateral trade between Germany and the USA amounted to over $160 billion. US exports to Germany totalled over $45bn, while German exports to the USA were worth over $100bn.
The main products traded between the two countries include: automobiles and automobile parts, chemical products, machines and electronic products.
B. Direct investments
In 2012, German foreign direct investment in the USA amounted to almost $200bn putting Germany in the top ten of countries investing in the USA. USA direct investment in Germany totalled over $120bn. Foreign direct investment between Germany and the USA remains strong and presents potential for businesses seeking to diversify internationally.
C. Legal framework for investments and trade
A range of legal agreements underpin the US-German relationship.
1. Double taxation
A double taxation agreement between Germany and the USA came into force on 21st August 1991. This agreement prevents income and capital being doubled-taxed. This means, for example, that tax cannot be levied in Germany on income or capital if it has already been taxed in the USA.
In the case of dividends, taxes can be levied in the state in which the paying company is established and in the state in which the recipient company is located. The tax rate applied in the country in which the company paying the dividend is located is capped at 15% unless the beneficiary company directly owns at least 10% in shares of the company paying the dividend, in which case a 5% tax rate applies.
2. Investment protection
No investment protection agreement exists between the USA and Germany.
3. Trade agreement
Free trade relations between Germany and the USA are soon to be governed by a bilateral free trade treaty between the European Union and the US. The Transatlantic Trade and Investment Partnership is currently being negotiated by the EU and US officials.
The partnership aims to remove barriers to international trade between in all economic sectors and make it easier for businesses to trade in goods and services.
The agreement seeks to improve market access by reducing customs duties and improving regulatory alignment and mutual recognition to reduce duplication in standards and approval procedures. The agreement also aims to improve investment protection, provide better access to public procurement markets, open up the US services market to EU businesses and support sustainable development.
It is thought that the TTIP will not only bring growth to the EU and US economies, but will also boost the global economy, which will benefit from spin-off demand. The agreement should also lead the way for improved cooperation in setting international standards.
German trade with the USA
If your German business would like to trade with the USA, or if your US company is seeking to enter the German and European market, call our specialist team on 0221 / 951 563 0 (Beratung bundesweit) or user our contact form.