German Legal Points for Business

1. German Legal Points for Business By : Guido Mayer attorney-at-law bar certified specialist for commercial – and company law business mediator Partner at Dumslaff & Partner Lawyers Loehrstr. 87b 56068 Koblenz Germany Phone : +49 261 96323 0 Fax : +49 261 96323 34

2. German an European Regulations of Import Customs Duties • The delivery of goods all over the EU is to be set apartfrom import ! • Importmeans the delivery of goods from beyond the bounds of the European Union (EU) into the European Union. RA Guido Mayer ____________________________________________ Dumslaff & Partner Rechtsanwälte

3. Europe E U R O P E RA Guido Mayer ____________________________________________ Dumslaff & Partner Rechtsanwälte

4. EU - Customs Code: Regulation EWG1 No. 2913/92 German Customs Code: ZollverwG 2 and AWR 3 Germany §12 AWR for dangerous goods Import Regulation from Non EU-Countries (e.g. Indonesia) 1EWG = Europäische Wirtschaftsgemeinschaft (European Economic Community) 2 ZollverwG = Zollverwaltungsgesetz (Administrative Law for Customs ) 3 AWR = Außenwirtschaftsgesetz (German Foreign Trade and Payments Law) RA Guido Mayer ____________________________________________ Dumslaff & Partner Rechtsanwälte

5. Customs Proceedings There are different kind of customs proceedings. The most important way is delivering goods from a non - EU - country into an EU - country. Another interesting custom proceeding is the bond warehouse. The other legal customs proceedings are only reasonable, if your client wants to cultivate a good in Europe! They are not attractive for your kind of business. Bonded Warehouse • Customs have not to be paid by being imported in the bonded warehouse, but by taking goods of the bonded warehouse. • Economically reasonable when destination of goods all over the EU is not clear RA Guido Mayer ____________________________________________ Dumslaff & Partner Rechtsanwälte

6. Merchandise Consignment Sales Customs & Port Clearance Service Account Payment & Collect Service Import Formality Packing & Re-packing Market Analyis Bonded Warehouse Warehouse Storage & Distribution Service Just-in-Time Delivery Service Bonded Warehouse RA Guido Mayer ____________________________________________ Dumslaff & Partner Rechtsanwälte

7. Online Database of Customs Tariff Website: http://ec.europa.eu/taxation_ customs/index_en.htm The Tariff of Duties and the taxes have to be paid by the importer ! Price Calculation TARIC EU Tariff of Duties RA Guido Mayer ____________________________________________ Dumslaff & Partner Rechtsanwälte

8. Reportable import Tariff of Duties Import Restriction Demand of Import License EZT Online Required Documents EZT (Electronic Tariff of Duties) Since Jan 1st, 2006, the German customs administration offers the tariff of duties addedwith national taxes (import sales tax and consumption tax) as „EZT – online“ (EZT = Electronic Tariff of Duties) in the internet: http://www.zoll.de/b0_zoll_und_steuern/a0_zoelle/c0_zollanmeldung/d10_atlas/e1_ezt_online/index.html RA Guido Mayer ____________________________________________ Dumslaff & Partner Rechtsanwälte

9. Required Documents (for normal case) 1. Bill of Entry; registration via Internet:https://www.einfuhr.internetzollanmeldung.de/iza/content.do 2. Invoice, with : Name, Address, Number of goods, Description of goods, Price of goods, Terms of payment and delivery Country of origin and destination 3. Declaration of Value It is only necessary if the value of goods is more than € 10,000 (120 million Rp.) RA Guido Mayer ____________________________________________ Dumslaff & Partner Rechtsanwälte

10. Drafting of Contracts Indonesia has not acceded the Convention on Contracts for the International Sales of Goods (UN – Sales of Goods) by now. Therefore it is very important to arrange choice of law and to arrange the place of jurisdiction. RA Guido Mayer ____________________________________________ Dumslaff & Partner Rechtsanwälte

11. Place of Jurisdiction It would be very difficult to carry out an Indonesian sentence in Germany. It is advisable to arrange the place of jurisdiction in Germany at the place where the buyer is located. RA Guido Mayer ____________________________________________ Dumslaff & Partner Rechtsanwälte

12. 3rd Country Law German Law International Law Choice of Law There are three practicable possibilities to draft the law: RA Guido Mayer ____________________________________________ Dumslaff & Partner Rechtsanwälte

13. Advantages International rules that are accepted by governments, legal authorities and practitioners world - wide As a rule fair and balanced Disadvantages Difficult to customise for particular interests In detail difficult to use 1. International Law UN - Sales of Good (CISG) / Incoterms RA Guido Mayer ____________________________________________ Dumslaff & Partner Rechtsanwälte

14. 2. German Law Advantages • German judges are very familiar with German law; if the place of jurisdiction is in Germany - as highly recommended -, it is advisable to choose German law; usage of foreign law leads to expert opinion and high cost • German buyers are common with German law; that avoids quarrels in connection with the contract and its interpretation • Contracts can be simply adjusted for the individual case Disadvantages • Requirement of legal advise in Germany • Your are not familiar to German law (until now) • A buyer in another European country does not know german law; it might be that he does not accept German law RA Guido Mayer ____________________________________________ Dumslaff & Partner Rechtsanwälte

15. 3. Choice of the Law of a Third Country Advantage: • Neither buyer nor purchaser know the law; chosen law is neutral Disadvantages: • High costs of legal advice • Legal actions are very expensive RA Guido Mayer ____________________________________________ Dumslaff & Partner Rechtsanwälte

16. German Import Sales Tax • Import sales tax called „Einfuhrumsatzsteuer“ originates according to § 1 subparagraph 1 number 4 of the German sales tax law (UStG) with the import of goods from a Non EU-Country; it is a special kind of value added tax. • Payment of import sales tax has to be proved by a receipt of custom house • Debtor is the buyer • The sales tax is actually in Germany about 19 % of the price of goods • In a normal case, the import sales tax is a VAT (Value Added Tax) on input • The buyer can subtract it from his sales tax, he has to pay So the buyer is not burdened with the import sales tax! RA Guido Mayer ____________________________________________ Dumslaff & Partner Rechtsanwälte

17. Import Sales Tax in different EU-countries RA Guido Mayer ____________________________________________ Dumslaff & Partner Rechtsanwälte

18. Concept of Co-operation between Indonesian Vendors and German Businessmen in Germany Instead of selling the goods to German importers, it is worth considering to incorporate with a German company, whose shareholders are shared between Indonesian vendors and German businessmen. RA Guido Mayer ____________________________________________ Dumslaff & Partner Rechtsanwälte

19. Concept of Co-operation Advantages : • Indonesian vendors does not need to search the German buyers • Prices can be negotiated in a fair way • Indonesian vendors don‘t need middlemen • No non-payment risk • All risks of selling are shared by all shareholders Disadvantages: • Indonesian vendors have to engage in a German company RA Guido Mayer ____________________________________________ Dumslaff & Partner Rechtsanwälte

20. Indonesian Supplier Indonesian Supplier Indonesian Supplier sell European Buyers Example of Cooperative Shared Sell Sell Sell Shared Shared Co-operation of Indonesian Suppliers in Germany (supported by German Companies) Buyers in Europe RA Guido Mayer ____________________________________________ Dumslaff & Partner Rechtsanwälte

21. Example of Contract (German Law) click RA Guido Mayer ____________________________________________ Dumslaff & Partner Rechtsanwälte