Why Germans invest in Serbia and Romania, but not Greece

“In Romania and Serbia a new German investment is made every week,” said the head of the German-Greek Chamber of Commerce and Industry, Michalis Maillis, deploring the unwelcoming conditions for investments in Greece.

“The climate at the moment is not very good,” he put it mildly. “There is uncertainty, overtaxation, and of course we still have the capital controls. I do not expect any German enterprises that are not active in Greece to make any investments in this country anytime soon,” Maillis added yesterday.

Still, in the next three years German investments in Greece will amount to some 3 billion euros, as they include the Fraport/Slentel consortium’s investment in 14 regional airports (amounting to 1.2 billion euros plus 330 million for the upgrading of installations) and Deutsche Telekom’s 1.3-billion-euro investment in OTE for the upgrading of telecommunications networks.

Unlike Greece, Romania and Serbia are seen as investor-friendly countries. While Greece is 60th in the Doing Business 2017 chart, which ranks countries according to the ease of doing business there, Romania stands in 36th spot and Serbia in 47th.

The corporate tax rate in Greece stands at 29 percent, against 16 percent in Romania and 15 percent in Serbia. In Romania there even is a special provision for very small enterprises, which have a 3 percent rate, while new small enterprises are taxed at just 1 percent for the first couple of years of operation.

The main value-added tax rate in Romania is at 20 percent – against 24 percent in Greece – while on food the rate dropped to 9 percent in June 2015. In Serbia the highest rate is also at 20 percent, but some food products are VAT-exempt.

Serbia introduced serious incentives for the increase in employment in July 2014, and both Serbia and Romania operate special economic zones with incentives for investing in them. A similar plan created by Antonis Samaras’s 2012-15 government met the opposition of the country’s creditors.