Incentives at a Glance

Incentives programs in Germany are available through different public funding instruments and for different funding purposes.

Grants for Investments

Investor facility set-up costs can be significantly reduced by cash incentives provided in the form of grants subject to defined conditions. One major program directs the allocation of these cash grants, the "Joint Task for Improving Regional Economic Structures" (Gemeinschaftsaufgabe - GRW), throughout Germany.

Grants for R&D

R&D projects can count on numerous forms of financial support. There are many programs allocating R&D grants, interest-reduced loans, and special partnership programs. Financing is provided by the European Union (EU), the German government, and the individual German states.

Grants for Hiring Personnel

Labor-related incentives play a significant role in reducing the operational costs incurred by new businesses. Germany's Federal Employment Agency (Bundesagentur für Arbeit) and the German states offer a range of labor-related incentives programs designed to fit the different company needs when building a workforce.

The range of programs offered can be classified into four main groups: programs focusing:

on recruitment support,

training support,

wage subsidies, and

on-the-job training.

Public Equity Capital

Start-ups and technology companies are often financed by a high degree of equity capital. However, equity capital also represents an efficient method of business activity financing for companies from the classical industry sectors. In Germany, equity capital from public sources is available from a number of different investor channels.

Public Loans

Investors can access publicly subsidized loan programs in Germany. These programs usually offer loans at below current market value interest rates in combination with attractive grace periods. These loans are provided by so-called development banks: publicly owned and organized banks which exist at the national and state level.

Public Guarantees

New companies often experience difficulties securing financing through the capital markets as, frequently, the required loans can only be collateralized to an insufficient degree. In these cases – with economically appropriate projects – public guarantees can replace or supplement any shortfall in securities.

Public Funding Framework

Most incentives are funded through the financial resources provided by the European Union (EU). The German government and the federal states also provide their own funds.