It boasts one of Europe’s biggest wealth management firms – Deutsche Bank – and has one of the strongest economies in the world (the fourth largest), while also making headlines by its willingness to act ruthlessly against suspected tax dodgers. Yes, we are talking about Germany.

The country is the world’s fourth-largest economy by nominal gross domestic product, with a population of 81 million, of whom 66 per cent are aged 15 to 64 years, slightly below the Group of Eight countries’ average of 67 per cent. The top 10 per cent of the population hold 22 per cent of income, which is some way below the G8 average of 26 per cent, suggesting, at least at first glance, a less unequal distribution of wealth than in some other leading industrialised nations.

HNW individuals in Germany hold an estimated $500 billion offshore, mainly in Switzerland and Luxembourg. The richest German is Karl Albrecht, with $23.5 billion of assets from his retail business, Aldi, which focuses on the discount retail side – a business model that has benefited in more cash-strapped times from consumers’ hunger for cheap products.

The second-richest person is also in retail, Michael Otto, with $18.7 billion of assets. His business, the Otto Group, is the mail order company. Other prominent wealthy individuals include Susanne Klatten (autos, pharmaceuticals); Stefan Quandt (autos); Reinhold Wurth (manufacturing); Hasso Plattner (IT); Johanna Quandt (autos); Erivan Haub (retail); Elizabeth Mohn and family (media) and Heinz-Horst Deichmann (shoes).

These and other facts are laid out by UK-based Ledbury Research in its latest profile of major countries from a wealth management point of view. The report makes a number of points:

Wealth transfer is expected to speed up as family-owned businesses in the vital Mittelstand sector sell up to corporate or financial buyers or transfer to the next generation.

Discretion is highly-valued, an issue intensified by the willingness of the tax authorities to hunt for accounts held at banks such as LGT, the Liechtenstein bank, or Credit Suisse. In some cases, authorities have paid for stolen data, which, depending on one’s point of view, shows a determination to root out tax evasion, or a cavalier attitude towards the rule of law.  

Ledbury says mergers mean Germany suffers from seriously restricted choice in terms of wealth managers: Deutsche Bank (it has purchased Sal Oppenheim) and Commerzbank (Dresdner). However, there are smaller players of note: Bankhaus Main and Rothschild Vermögensverwaltungs-GmbH (this bank is part of Rothschild Private Banking & Trust), and HSH Nordbank Private Banking, with a strong presence in Hamburg, for example. Another bank is Berenberg Bank, also of Hamburg.   

Wealthy Germans tend to be conservative and averse to investment risk. As an illustration, the country holds 11 per cent of the world’s 950 million ounces of gold – only the US holds more.

German consumers are focused on cars – perhaps unsurprisingly given Germany’s traditional prowess in this area. Among the top 10 luxury brands German consumers listed among those they would most like to own, seven were automobile brands.

Taxation

Income tax rates, as with many other European nations, rise as incomes increase. As of this year, the German tax rates on an individual ranged from 14 per cent to 45 per cent (which means that Germany’s top tax rate is now lower than the top UK band, of 50 per cent).    

Singles pay on income above €250,731 (around $363,843) (couples, on income above €501,462) income tax of 45 per cent before a 5.5 per cent solidarity tax (which might also be known as a wealth tax).

An individual who meets the test of a "permanent resident" of Germany has tax calculated on his income in Germany and from overseas. Foreign residents who are employed in Germany pay tax only on income earned in Germany. To be considered a German citizen, a test must be met of either a life centred in Germany or a continuous stay of six months in the country. (Source: www.worldwidetax.com)