Entering the German market: the complete guide

1. The German market: why it is still the biggest opportunity

Germany is the largest economy in Europe and one of the most important trading partners for practically every European country, the Nordics included. For a company from Finland, Sweden, Denmark or Norway, the conditions are unusually favourable: short logistics routes, the same regulatory framework within the EU and EEA, and – for Finland – even the same currency.

Sources: Destatis, IfM Bonn, Statistik Austria, Swiss Federal Statistical Office.

The economy is turning – and that is a timing opportunity

In 2025 the German economy returned to growth after two years of contraction: GDP grew by 0.2 per cent, household consumption by 1.4 per cent and government spending by 1.5 per cent. Employment held at 46.0 million, and the government deficit fell to 2.4 per cent of GDP, below the EU’s three per cent threshold.

A turning point is an unusually good moment to enter. When the market is just starting to move, German companies actively look for new suppliers and price-competitive alternatives – but competition for new customers is still lower than at the height of an upswing. Those who build their contact base now will be ready when investment picks up.

The best time to build a German customer relationship is a year before the customer makes the investment decision.

What the current climate demands from you

German buyers compare more carefully today than they did five years ago. For a new foreign supplier that is an advantage rather than a disadvantage: when decisions are based on facts rather than long-standing supplier relationships, newcomers have a real chance. Three things make the difference.

• A well-founded price. A new supplier must be able to show the switching cost and the benefit in numbers – not just claim to be better.
• A German-language contact point. Buyers compare what they can find and understand in their own language.
• Patience. Decision chains have become longer, so measure progress by advancing conversations rather than monthly revenue.

The German Mittelstand is the ideal customer

Germany has around 3.4 million companies, 99.2 per cent of which are SMEs (IfM Bonn). Mid-sized, often family-owned industrial companies – the Mittelstand – are an exceptionally good target group for component, technology and food suppliers: they are global, quality-driven and loyal in their partnerships. A German customer relationship that survives the first year often lasts ten.

Germany is also the gateway to the wider German-speaking market. Together with Austria and Switzerland, the DACH region forms a market of almost 102 million people, with largely the same language, partly the same distributors and the same trade fairs. One German-language material package opens three markets.

2. Is your company ready for the German market?

The most common reason for a failed market entry is not the market but the timing: a company goes to Germany before its home business can carry the resources it takes. Go through the list below honestly before you budget a single euro.

Commercial readiness

• Your margin can carry an intermediary. If you sell through an importer, 25–45 per cent of the price goes to the partner’s margin. If your home-market margin is 30 per cent, the numbers won’t work without a price change or a different cost structure.
• Production capacity is sufficient. A German retail or industrial customer does not tolerate unreliable delivery. The first late delivery is often also the last.
• Pricing is documented. You need a price list, volume tiers and the logic of how price changes with quantity – in German and in writing.
• References can be shown. Preferably named. An anonymous reference (“a Nordic industrial company”) doesn’t convince a German buyer.

Operational readiness

• Someone is responsible for Germany by name. If responsibility lies with “the sales director, alongside everything else”, the project fades within three months.
• German-language material exists or is budgeted. Website, brochure, product information and quote template. English rarely suffices.
• Who answers a call in German? If the answer is “nobody”, you need an external resource or a hire.
• Regulatory requirements are clarified. See chapter 5 – some requirements must be met before the first delivery, not after.

Financial readiness

• Funding covers 18 months. In B2B, 6–18 months typically pass between first contact and first invoice. A project funded for six months gets cancelled just before it would start to pay off.
• Payment terms are thought through. In German B2B trade the average agreed payment term is around 60 days, and according to Atradius, 57 per cent of B2B sales were affected by overdue invoices in 2025. Working capital needs are genuinely higher than at home.

3. Four routes into the German market

The entry model determines your margin, control, risk and how quickly you get going. Most SMEs use one of these four routes – and none of them requires a German company.

1. Direct export

You sell directly to German end customers from your home country. The margin is the best and you own the customer relationship. The price is that you have to do the sales work yourself, in German, and travel costs money. It works well when there are few customers and deal sizes are large.

This is in practice the most common route for B2B products – and the one our lead generation service is designed for.

2. Online shop and marketplaces

For consumer products, your own online shop or a German marketplace is a fast way to test demand without distribution agreements. Note, however, that online sales to Germany trigger a number of obligations: packaging registration, German-language terms and cancellation policy, the Impressum requirement and VAT questions. See chapters 5 and 6.

3. Importer or distributor

The partner buys on its own account and resells. A fast way to get the product onto shelves, and often the only realistic route into broad retail distribution: German chains typically don’t negotiate directly with a small foreign supplier.

The risk is twofold. The product may end up at the bottom of the partner’s range without real sales effort, and exclusivity granted too early locks the market for years. So always negotiate: a limited territory or channel, minimum volumes, a fixed term and clear termination rights if targets are missed.

4. Commercial agent

An independent agent sells in your name and earns a commission. The model is well established in German industry, and a good agent has a ready customer base. In practice, finding a good one is hard: the best already have a full portfolio, and a new product may not get their attention.

Use a lawyer when drafting the contract – German commercial law (§ 84 ff. HGB) contains provisions protecting the agent, including a compensation claim when the contract ends (§ 89b HGB).

4. Pricing and margin structure in the German market

The most common pricing mistake is to calculate the price upwards from your own cost. In the German market the price is calculated downwards from the shelf price: what is the market price, what does every step need as its margin, and what is left for you?

Example: a consumer product sold through retail

The calculation below is an illustrative example of one possible chain – not an industry average and not a promise of what will happen with your product. Margins vary significantly by product group and channel. The point is the direction of the calculation: from the shelf down, not from cost up.

The real steps for your product are worked out in the market study – with real figures rather than an example.

If your production cost is €4.00, the calculation works – just about. If it is €5.50, this model won’t work: you need a more direct channel, a higher price position or a different customer segment.

Four things foreign suppliers forget in pricing

• Listing fees and marketing support. German retail chains expect you to contribute to promotions, leaflets and shelf placement. These are real costs that must be budgeted up front.
• Annual discounts and bonuses. A volume-based bonus paid retrospectively (Jahresbonus) is standard practice and often cuts 2–5 percentage points off the margin.
• Returns and write-offs. Especially in food and seasonal products.
• Payment terms. A 60-day payment term ties up working capital. Some buyers also negotiate a cash discount (Skonto) of 2–3 per cent for early payment.

Raw materials and bulk goods

Not every chain has many steps. For raw materials, components and bulk products, pricing is often simple: a unit or per-kilo price, freight and the delivery term – that’s it. What matters then is not a sophisticated pricing model but that price, quality and reliability stand up to comparison.

In these deals, pay attention to three things: choose the delivery term deliberately (see chapter 6), agree a price adjustment mechanism if raw material prices fluctuate, and make sure you can deliver the agreed quantity on time next time too.

Capital goods and systems

For a machine, equipment or a system, German purchasing departments often compare the total cost of ownership rather than the purchase price alone: installation, maintenance, energy consumption, spare parts and downtime risk are all included. If your product is more expensive to buy but cheaper to run, present this calculation yourself – in German.

5. Product requirements and regulation in the German market

Some requirements must be met before the first delivery, not afterwards. In Germany, non-compliance frequently leads to a formal warning letter (Abmahnung) from a competitor or consumer association, with costs and penalty clauses attached.

CE marking and product safety

Most industrial and technical products require CE marking and a declaration of conformity. The EU General Product Safety Regulation (GPSR, Regulation (EU) 2023/988) has applied since 13 December 2024. Among other things, it requires products placed on the EU market to have a responsible economic operator established in the EU, whose contact details appear on the product or its packaging, plus traceability and certain mandatory information for online sales.

For manufacturers based in the EU, such as Finnish, Swedish or Danish companies, this is usually already covered. Manufacturers from outside the EU – for example from Switzerland or the UK – must designate an EU-based operator. Norwegian companies should check how the rules apply under the EEA Agreement.

Packaging: VerpackG, LUCID and dual systems

This is where outdated knowledge survives longest. People used to talk about the “Green Dot” (Der Grüne Punkt), which for a long time was effectively the only operator. Today it is one of several competing dual systems – no longer a requirement in itself, nor a synonym for the whole obligation.

Since the 2019 Packaging Act (VerpackG) there are two separate obligations, and both must be met:

1. Registration in the LUCID packaging register. LUCID is a public register run by the Zentrale Stelle Verpackungsregister. Registration is free and must be completed before the first delivery. Packaging volumes are also reported to the register.
2. Joining a dual system (Systembeteiligung). A dual system is a private company that organises the collection and recycling of packaging waste. Several competing systems operate in Germany, Der Grüne Punkt being one of them – you can choose freely, and it pays to compare prices. This part is paid.

The data from both are cross-checked, so doing only one is not enough. The obligation applies to everyone regardless of company size or sales volume – including foreign online shops delivering to Germany.

Non-compliance can lead to substantial fines, and in practice marketplaces and platforms require a LUCID registration number before you can start selling.

Note also that the EU Packaging and Packaging Waste Regulation (PPWR) will bring changes to packaging requirements over the coming years. Check the current status before making packaging decisions.

Other product-specific registrations

• Electrical and electronic equipment: the ElektroG requires registration with the EAR register before placing products on the market, and foreign producers without a German establishment must appoint an authorised representative in Germany.
• Batteries: a separate registration and take-back obligation.
• Food: the EU Food Information Regulation (1169/2011) requires German-language labelling, a nutrition table and allergen labelling. Nutri-Score is voluntary in Germany but often expected by retailers.
• Cosmetics: CPNP notification and a responsible person.
• Wood products and certain raw materials: the EU Deforestation Regulation (EUDR) introduces due diligence and traceability requirements; its application timetable has been changed, so check the current status.

Supply chain due diligence

The German Supply Chain Due Diligence Act (LkSG) obliges large companies operating in Germany to address human rights and environmental obligations in their supply chains. An SME supplier is not itself within the scope of the law, but the obligation trickles down through contracts: large German customers increasingly ask for a supplier questionnaire, a code of conduct and documentation.

Practical advice: prepare this in advance. A missing answer to a supplier questionnaire can hold up an otherwise finished deal for months.

Website and marketing

• Impressum: in Germany a website must have a legally compliant Impressum (§ 5 DDG) – contact details, responsible person, commercial register details and VAT number.
• Cookies: non-essential cookies require explicit consent (TDDDG and GDPR).
• Email marketing: consent is generally required, even in B2B communication (§ 7 UWG).
• Price information: in consumer e-commerce you must show the total price, the unit price (Grundpreis) and shipping costs.

6. VAT, customs and logistics

Business-to-business (B2B)

Selling goods from another EU country to a VAT-registered German business is an intra-community supply: you invoice without your home country’s VAT once you have verified the buyer’s valid VAT ID (VIES) and can prove that the goods were transported to another member state. The buyer accounts for the VAT under the reverse charge mechanism.

Intra-community supplies are reported in the recapitulative statement, and sufficiently large flows of goods also require an Intrastat declaration.

Business-to-consumer (B2C)

For intra-EU distance sales to consumers, an annual threshold of €10,000 applies, calculated across all EU countries combined. Above the threshold, sales are taxed in the buyer’s country – in Germany at the standard rate of 19 per cent or the reduced rate of 7 per cent. In practice this is handled through the OSS scheme (One Stop Shop), so no separate German VAT registration is needed.

When you need a German VAT number

OSS doesn’t cover everything. Registration in Germany is typically required when you

• store goods in Germany (for example in a fulfilment warehouse),
• sell goods already located in Germany to German consumers,
• perform installation or construction services in Germany to which the reverse charge does not apply, or
• import goods from outside the EU through Germany in your own name.

The VAT affairs of foreign companies are centralised in Germany by country of residence (§ 1 UStZustV): Finanzamt Bremen for companies from Finland and Norway, Finanzamt Hamburg-Nord for Sweden, Finanzamt Flensburg for Denmark, Finanzamt München for Austria and Finanzamt Konstanz for Switzerland. In practice all correspondence runs through one office, in German – see our VAT registration service and the VAT guide.

Switzerland is a different story

Switzerland is not part of the EU customs union or VAT area. Exporting to Switzerland requires an export declaration, an import declaration and proof of origin so that the preferential tariff under the EU–Switzerland agreement applies. Swiss VAT rates are well below Germany’s, and a foreign seller may become liable for Swiss VAT once its turnover exceeds a threshold. Deal with this separately if Switzerland is your target market. The same logic applies in reverse to Norwegian companies: Norway is in the EEA but not in the EU customs union or VAT area.

Delivery terms

Always use the current Incoterms and state the version year in the contract. The most common, in terms of transport costs and transfer of risk, are:

• EXW – the buyer handles everything. The simplest for the seller, but the least attractive for the buyer.
• FCA / CPT – balanced and common in industrial trade.
• DAP / DDP – the seller handles transport to the destination. DDP means the seller is also responsible for import formalities and duties; within the EU this is simple, but for deliveries to Switzerland or Norway it is a significant responsibility.

7. Contracts, payment terms and risk management

AGB: standard terms and conditions

In German business, both parties often refer to their own standard terms (Allgemeine Geschäftsbedingungen, AGB). If the terms conflict, the points on which both agree generally apply, and the rest is filled in by statute. German review of standard terms is strict: a clause considered unreasonable can be declared invalid even in a contract between businesses.

In practice: have German-language standard terms drafted by a German lawyer – don’t just translate your home-market terms.

Retention of title

Germany has a well-established and effective retention of title system (Eigentumsvorbehalt) that you should use: an extended or prolonged retention of title protects the supplier if the buyer becomes insolvent. The clause must be in the contract or the standard terms – a mention on the invoice alone is not enough.

Payment terms and payment behaviour

According to the Atradius Payment Practices Barometer 2025, among German companies

• the average agreed payment term in credit sales was 60 days,
• 57 per cent of B2B sales were affected by overdue invoices,
• bad debts averaged 8 per cent, and
• 60 per cent of respondents reported that their customers’ payment behaviour had deteriorated.

This doesn’t mean German customers are unreliable – it means working capital needs are genuinely higher than in many home markets. Protect yourself like this:

• Check credit information before the first invoiced delivery. German limited companies publish their annual accounts in the Bundesanzeiger.
• Stage the first deals: prepayment or partial payment for a new customer.
• Consider credit insurance or export credit guarantees from your national export credit agency for larger deals.
• Agree late payment interest and collection costs in writing.

Applicable law and dispute resolution

Agree the applicable law and place of jurisdiction in writing. The foreign seller usually prefers its own law and arbitration, the German buyer German law and a local court. In international sales of goods, the UN Convention on Contracts for the International Sale of Goods (CISG) also often applies unless explicitly excluded. This is where a lawyer pays for themselves.

8. The German market sales process and a realistic timeline

Foreign companies systematically underestimate how long a German B2B buying process takes. That is not due to slowness but to thoroughness: several people are involved, documentation is checked and risks are assessed in advance.

Who decides

In a typical German mid-sized company, three to six people are involved in a purchasing decision: the technical user, purchasing (Einkauf), quality, finance and the final approver. Purchasing gets involved earlier than in many other countries and has real power – a technical “yes” is not yet a deal.

Typical timeline

The table shows orders of magnitude, not a promise. An individual project can move much faster if the buyer has an acute need or the current supplier has let them down – or much slower if the purchase depends on the budget cycle. Our experience relates primarily to B2B.

What this means for your German market entry

• Don’t measure success by deals in the first six months. Measure decision-makers reached, requests for quotes and customers who have moved into testing.
• Document everything. A German buyer will return to the conversation months later and expect you to refer to what was agreed.
• Prepare for an audit. An industrial customer may want a factory inspection. Prepare in advance – it is a sign of trust, not suspicion.

Read more: German and Nordic business culture in B2B sales.

9. Funding and public support

The early exploration phase of internationalisation is well supported in most European countries. Instrument names and terms change, so always check the current criteria directly with the funding body – below is an overview of what is typically available.

National export promotion and funding

• Finland: Business Finland offers SME instruments in which market exploration and external expert services are eligible costs. Since the beginning of 2026, Business Finland’s international network has been part of the Ministry for Foreign Affairs, so local export promotion in Germany runs through the Finnish embassy, while funding is still applied for from Business Finland. Export credit guarantees: Finnvera.
• Sweden: Business Sweden supports internationalisation; export credit guarantees are available from EKN.
• Denmark: the Trade Council of the Ministry of Foreign Affairs supports export projects; export financing is available from EIFO.
• Norway: Innovation Norway supports internationalisation; export financing is available from Export Finance Norway (Eksfin).

Other sources

• Bilateral chambers of commerce (AHK) – the German chambers in Finland, Sweden, Denmark and Norway offer paid market services, contacts and events.
• Enterprise Europe Network – a free partner search service across the EU and beyond.
• Joint pavilions at trade fairs – organised by national agencies or industry associations, often at a reduced price.

10. A twelve-month action plan for the German market

Below is a framework that can be applied to most SME projects in the German market. The schedule assumes the product is ready and a responsible person has been named.

The most important feature of the plan is that there is a decision point after every phase. If the market study shows that your price can’t carry an intermediary, the project doesn’t continue as it is – which saves tens of thousands of euros.

11. Ten common mistakes in the German market

1. Going in without a price calculation. The product is good, but the margin can’t carry the importer’s share. This becomes clear in the first negotiation – or, worse, only after the contract is signed.
2. Thinking English is enough. It rarely is. German-language material is a basic requirement, not a competitive advantage.
3. Granting exclusivity too early. Exclusive rights for all of Germany to the first enthusiastic distributor, without minimum volumes, lock the market for years.
4. Handling registrations afterwards. LUCID, EAR and product-specific notifications must be done before the first delivery.
5. No named project owner. “We’ll handle it alongside our other work” means, in practice, that it doesn’t get handled.
6. Funding for only six months. The project is cancelled just before the first deals would have closed.
7. Going to a trade fair without pre-booked meetings. The stand costs tens of thousands, and you spend three days waiting for someone to stop by. Read the trade fair guide.
8. Forgetting the follow-up. Leads that aren’t contacted within a week are practically lost.
9. Not checking credit information. A 60-day payment term for a new customer without a background check is an unnecessary risk.
10. Expecting home-market decision speed. When nothing happens for six weeks, it’s usually the normal process – not a lack of interest. Ask directly where the decision stands and who is involved.

Where to start

If you are reading this and thinking about the first step, it is almost always the same: find out whether there is demand for your product, and at what price. Everything else builds on that. See market research or book a free call and we’ll go through your situation.