Everything you need to know about doing business in Europe.
Compiled by Metropolitan Media
Munich
Map
Overview
Munich is the capital city of the State of Bavaria, Germany. Located on the banks of the Isar River, the city covers an area of 310.43 km2 and is the third largest in Germany after Berlin and Hamburg. In 2009 official Bavarian statistics estimated the metropolitan population at 1,330,400 with a density of 4,286/km2. The official spoken language is German, although many people speak with a distinct Austro-Bavarian dialect.
With a rich political and cultural history, Munich today retains much of its sophisticated heritage, whilst operating as one of Germany’s economic powerhouses. The city not only has a reputation for steady growth, but also consistently ranks as one of the world’s top cities in terms of quality of life. The city is also one of Germany’s most important cultural centres and home to a number of internationally acclaimed art galleries and museums. Its traditional character, beautiful architecture, vibrant festivals and spectacular scenery have all made Munich a popular tourist destination, attracting millions of visitors each year.
Belonging to the Upper Bavaria Government Region, Munich is currently governed by a coalition of the Social Democratic Party of Germany (SDP), the Greens and Rosa Liste or Pink List, a gay rights party. The city’s current mayor is Christian Ude of the Social Democratic Party. Ude was first elected in 1993, and has enjoyed four consecutive re-elections since this time.
Economy
Munich is Bavaria’s economic heartland and with its enviable geographic location and strong industry and business sectors, has become one of Germany’s most important economic centres. In 2008 government statistics estimated Bavarian GDP at €444 billion. Munich and its surrounding areas were estimated to be responsible for generating around 30% of total regional GDP.
Munich’s tertiary sector is its largest, followed by manufacturing, construction and agriculture. The city’s primary industries are media, finance, automotive, biotechnology, science, tourism and retail. Munich is considered to be Germany’s second largest banking hub, and as a leading centre for technology has earned a reputation as the country’s very own “Silicon Valley”.
Munich’s economic strength lies in its diverse structure, blending traditional industries with a broad spectrum of fast growing innovative sectors. Its dynamic economic landscape has led Munich to host the headquarters of a number of leading international businesses including Allianz, BMW, Infinoen, Linde and Siemens.
Munich’s agricultural sector, although small is still plays an important role in local economy. Farms and agricultural land surrounds the city centre, producing wheat, barley, sunflowers flax and meat products.
Major exports from the region include Machinery, Vehicles, Chemicals, Metals, Food stuffs and Textiles.
Infrastructure
Munich’s location makes it a major transportation hub for goods travelling from the north to south and east to west of Germany. The city is linked to other major cities and neighbouring countries by a network of well maintained Autobahns and Railways.
The city centre operates a modern and efficient public transport system that consists of a U-Bahn, S-Bahn, trams and buses. Munich’s main railway station or Hauptbahnhof moves over 350,000 passengers per day, making it the second largest station in the country. The station operates frequent Eurocity and Intercity trains to Hamburg, Frankfurt, Berlin and numerous other European cities, alongside extensive regional services to surrounding areas.
Munich’s U-Bahn and S-Bahn systems form the backbone of public transport moving passengers throughout the metropolitan area and beyond. The combined networks boast a total of 27 lines running over 500 kilometres with more than 140 stations.
Munich’s award winning Franz Josef Strauss International Airport is the city’s largest airport, and lies 30 kilometres north east of the city centre. The airport is the second busiest in Germany, moving in the first half of 2009 over 15 million passengers and 100,000 metric tons of freight to destinations throughout the world. Flight schedules serve over 220 destinations in 65 countries. The airport has undergone dynamic growth over recent years, and to keep up with demand is planning a third runway which should be operational by 2011.
Workforce
In 2009 The Federal Employment Agency estimated Munich’s total workforce to be 690,000 people. The work force is predominantly German with a small proportion being made up of Turkish, Croatian, Serbian and Dutch.
Around 79% of the workforce was employed in the city’s services sector, followed by 20% in Manufacturing and Construction. Agriculture and Forestry accounted for the remaining 2%. Main industries within the services sector included Motor Trade, Financial, Information and Communication, Health & Welfare and Sciences.
Munich’s highly skilled workforce results from the city’s exceptional public education system that is widely regarded as one of the best in Germany. As Germany’s second largest university centre, Munich is home to over 90,000 students who attend one it’s many esteemed universities, technical universities or polytechnics. Munich is also a leading location for science and research, containing a number of research organisations and institutes, including the Max Planck and Fraunhofer Societies.
Local consumers enjoy purchasing power of €25,237 per capita, 38% higher than the national average.
In November 2009, the department of labour and economic development estimated Munich’s unemployment rate at 4.9%, the lowest of all major German cities.
Business Costs
Germany’s individual income tax rates work on a progressive scale of 0% - 45%.
Corporate tax is charged on corporate enterprises, in particular public and private limited companies as well as other corporations e.g. cooperatives and foundations. In addition businesses are expected to pay a solidarity tax of 5.5% and trade tax. The standard corporate rate in 2010 was set at 15%, but combined with the additional taxes; the effective corporate tax rate is about 30%-33%.
The standard VAT rate in Germany is 19%, whilst a reduced VAT of 7% can be applied to food and agriculture products.
Germany does not operate a national minimum wage, although there are special regulations in certain industry sectors such as construction, to ensure an agreed minimum hourly rate.
Research carried out by Cushman and Wakefield in 2009 revealed that Munich offered competitive location cost versus other major European cities, with an average office rental cost of €409/sq.m per year.
