Location Bureaucracy drives companies out of Germany

Related Vendor

FAULHABER Drive Systems

According to a large-scale company survey conducted by the Ifo Institute, increasing bureaucracy is preventing new investments in Germany and driving many companies abroad. Particularly affected: Industrial companies.

Almost 91% of the 1,763 companies surveyed complained that bureaucracy had increased since 2022; among industrial companies, the figure was as high as 95%. At the same time, almost 46% said that they had postponed planned investments in the past two years due to administrative hurdles. And just under 18% want to relocate investments abroad in order to avoid domestic bureaucracy.

The client was the Family Business Foundation, which has published the annual monitor on bureaucracy every year since 2017 in cooperation with the Ifo Institute.

Supply chain law, complex approval procedures, tax law

Many of the companies surveyed complained about the Supply Chain Act, which comes into force in 2023, the high cost of official approval procedures - especially in construction law—and the complicated German tax law. According to the survey, the larger the company, the greater the tendency to relocate abroad: Among companies with more than 250 employees, a quarter are planning to relocate investments abroad.

The biggest companies are also the most annoyed

According to the survey, anger and annoyance run exceptionally deep among the largest companies: 57 of the largest German family businesses with a total of 403,000 employees and a turnover of over 90 billion euros took part in the survey, 42.6 percent of which are considering relocating abroad. The authors, led by Ifo survey director Klaus Wohlrabe, consider this result to be "particularly serious", even if they point out that the figure only shows a trend due to the low number of participants.

According to the survey, dissatisfaction is directed less against the municipal administrations that implement the requirements of higher levels than against the federal states and the federal government. Just under 43% rated their respective experiences with municipal or city administrations positively, but only 7% were satisfied with the state and federal governments.

According to the survey, a particularly negative aspect for many companies is that the majority of administrative procedures still have to be completed on paper and are not possible digitally. And where digital communication with the authorities is already possible, it often does not work according to the survey: only 8.5 percent said that it runs smoothly.

Family businesses demand relief—once again

As in previous years, the Family Business Foundation, as the client, called for improvements—or relief—from politicians. "These figures make me angry," said Rainer Kirchdörfer, Chairman of the Foundation. The main demands: a "practical check" for new regulations, faster procedures, expansion of digitization and the restriction to "essential information" when fulfilling official requests and requirements.