GBP Monitor March: Fast Internet Is More Important to Companies than Low Trade Tax

A well-developed digital infrastructure with a strong network and the availability of a qualified local workforce are more important to companies when selecting their location than low municipal taxes and fees. For attracting business, investing in public infrastructure is more powerful than lower taxes. This is shown in the March report of the German Business Panel (GBP) at the University of Mannheim.

Municipal trade tax is often seen as a way to attract business investments. If the municipal trade tax is low, this means lower costs for companies and thus a strong location advantage. But when making business decisions, other local characteristics such as infrastructure, schools, daycare centers, a good connection to the highway, or business development measures also play a role. The newest GBP survey shows the factors that are particularly important to companies.

The most important factor for a business location is a powerful digital infrastructure. Companies make their investment decisions dependent on whether fast Internet with broadband networks is available at the location. “Data transfer without delay is decisive because many applications with a promising future, such as cloud services, are data-intensive” says Professor Johannes Voget, holder of the chair of Taxation and Finance at the University of Mannheim and project manager of the GBP. The survey further shows that a qualified local workforce, a good transport infrastructure as well as suitable commercial spaces also determine how attractive a community is as potential business location.

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