The German Foreign Business Act
While Thailand’s legal system comprises strict rules to limit foreign business activities, foreign acquisition of real estate and residence permit, Germany is much more open to foreign investors. In general, there are no restrictions or additional requirements to set-up a foreign owned business in Germany. This creates a leveled playing field for Thai and other foreign investors to compete with domestic corporations in Germany.
An exception to this rule are the provisions of the Foreign Business Act (“Aussenwirtschaftsgesetz”), also translated as Foreign Trade and Payments Law or Foreign Trade Act, enhanced and specified by a governmental regulation (“Außenwirtschaftsverordnung”).
However, this legislation has to be seen as a very specific exception rule for a small scope of acquisitions in Germany, not as a general limitation of foreign investments. Domestic branches and permanent establishments of foreigners and foreign branches and permanent establishments of residents shall be regarded as legally independent. Limitations apply in cases only,
- to guarantee the essential security interests of Germany,
- to prevent a disturbance of the peaceful coexistence of nations or
- to prevent a substantial disturbance to the foreign relations of Germany,
- to guarantee the public order or security of Germany or
- to counteract a danger to the coverage of vital needs in Germany or in parts of Germany and thereby to protect the health and life of human beings.
Restrictions and obligations to act shall be limited in nature and scope to the extent necessary to achieve the objective. They shall be framed in a manner which intervenes as little as possible in the freedom of economic activity. Restrictions and obligations to act may affect existing contracts only if the objective is in serious jeopardy. They shall be revoked as soon as and insofar as the reasons warranting their imposition no longer apply.