Frankfurt – The Mainhattan of Europe
The city of Frankfurt (traditionally known as Frankfurt am Main) is located in central Germany, in the state of Hesse, along the banks of the River Main. It has a population of 764,104 with a density of 3,100/km2 (8,000/sq mi) in the central area. In the urban area, there is an estimated population of 2,319,029 people. In the metropolitan area, there is an estimated population of 5,604,523 people. Its territory covers 248.31 km2 (95.87 sq mi), making it the fifth-largest city in Germany, after Berlin, Hamburg, Munich, and Koln.
The total area of Frankfurt is divided into 16 Ortsbezirke, or sub-districts, each with a separate committee and a chairperson who is responsible for the running of local services in each of the areas. Germany was a founding member of the European Union and fully adopted the euro (EUR) system in 2002, which replaced the old Deutsche Mark (DM).
Frankfurt is not only an area of central economic importance in Germany but in Europe too. Its economy is based around the service sector, particularly the financial and banking industries. Frankfurt’s modern skyline is filled with prestigious domestic and foreign-owned banks and has earned it the nicknames of Mainhattan of Europe and the city of banks. The XETRA stock exchange is the second-largest stock exchange in Europe, and it is located in the Heart of Frankfurt. Other major banks in the area include the European Central Bank and the German Federal bank.
The city is a major contributor to Germany’s GDP and one of the wealthiest cities in Europe based on the high GDP per capita (PPP) rate of $94,190 (2022). Frankfurt is also used for large business conventions due to its central positioning and excellent infrastructure. Some of the world’s largest trade fairs are held in this city, most in the Messe Frankfurt, the third-largest convention center globally, and employs over 1400 people.
The most prominent and busiest airport serves the city in Germany: Frankfurt International Airport, located just 12km away from the central business district. The airport handles 64.5 million passengers in 2017 and nearly 70 million in 2018. It offers flights to 265 domestic and international locations.
Frankfurt is also home to Germany’s busiest railway station, Frankfurt Hauptbahnhof, handling over 350,000 passengers daily. It is integrated with the public transportation system and offers several services such as trams, S-Bahn, U-Bahn, and high-speed ICE trains, which allow quick transport to other major cities in Germany.
Frankfurt has invested heavily into improving the transportation system and integrating more environmentally friendly transport options into the city. The road system is also well developed, with an interchange located within proximity to the airport, allowing for easy domestic travel and linking to Germany’s neighboring countries.
The German workforce is known for its efficiency, and Frankfurt’s workforce is no exception. The growing service sector has attracted many professionals from both Germany and other countries in Europe. It is a multi-cultural city, with over 30% of the population holding a foreign passport and many people hailing from Eastern Europe, North Africa, and Turkey. The official language for Frankfurt is German, with many residents speaking English. Frankfurt was voted one of the best cities globally in terms of the number of languages spoken by the current workforce.
Like the rest of Germany, Frankfurt has a structured and robust education system, which allows students to focus and develop their talents, either by studying more traditionally for university entry or by taking a more vocational and practical route. There are two major universities located within the city center: the Frankfurt University of Applied Sciences and the Johann Wolfgang Goethe University. Both offer internationally accredited degree programs and have a combined student population of over 58,000, many of whom come to study from international countries.
Business Costs in Frankfurt
Out of Germany’s five largest cities (Berlin, Frankfurt, Hamburg, Munich, and Dusseldorf), Frankfurt has the second-highest office rental rates, with office space costing an average of $54.29 per square foot per year. Although these office rental costs are comparatively lower than rentals in Paris CBD and London (West-End), which cost an average of $93.14 and $119.40 per square foot per annum, respectively.
Frankfurt is one of the best city locations in the world to do business in, based on factors such as infrastructure, location, and the availability of a qualified workforce.
Any individuals residing in the country for more than six months of the year are classed as German residents and must pay tax on both incomes earned in the country and abroad. Non-German citizens are only required to pay tax on income earned in the country. German corporate taxes are levied on both a federal and municipal level. The federal rate stands at 15%, with additional municipal rates and a tax surcharge bringing up the corporate tax rate to 30% – 33%.
Individual tax rates are based on tax brackets which vary depending on the income earned. Any individuals earning less than EUR 9,744 are exempt from paying income tax. Any individuals earning over EUR 274,612 are required to pay 45% tax. There are numerous tax deductions available to ease the tax burden. Germany has two levels of a value-added tax: 19% and 16%, with the lower rate being available for certain foodstuffs.
From January 1st, 2021, the minimum wage is 9.50 euros per hour worked and from July 1st, 2021, the minimum wage is 9.60 euros per hour worked. Since 2020, the minimum wage rate in Germany is around 1.584,00 EUR net. Some sectors have low set rates based on a collective bargaining system. Generally, national average wages in Germany are lower than average wages in Luxembourg and London.