Real estate, for instance, that is situated in Germany and which a
foreign investor acquires for the purpose of letting said property,
is deemed a direct investment.
The foreign investor engages in
ongoing business activities in Germany but maintains neither a
fxed place of business operating as a permanent establishment
nor a commercial partnership or corporation in Germany. In such
case, the German-source income generated by foreign investors
is typically subject to non-resident (limited) tax liability in Ger-
Such activities are not subject to resident (unlimited) tax
liability, as the investor does not reside in Germany. The amount
of direct investments carried out is of no relevance.
Investing through direct transactions or direct investments in
Germany typically results in the lowest administrative burden,
requires no or only a very short lead time, and allows for the
greatest fexibility .
This type of investment is thus particularly appropriate for the
initial phase of business activities to be conducted in Germany, if
business activities in Germany are not intended to be conducted
on a permanent basis, or only on a small scale.