Middle East Desk

Middle East investors in Germany: an overview

Investors from the Middle East, and in particular from the Gulf states, have become important sources of capital for Germany. Sovereign wealth funds and state-owned investment companies hold stakes in German listed companies, infrastructure and energy assets; family offices invest in real estate, Mittelstand companies and venture capital; and energy companies from the region partner with German utilities and industry on hydrogen, liquefied natural gas and renewable energy.

For Middle East investors, Germany offers stable law, independent courts and a large market. At the same time, investment screening looks closely at state-controlled acquirers, real estate transactions have their own tax and transparency rules, and Sharia-compliant structures must be fitted into German civil, tax and regulatory law.

This page sets out the German law issues that investors from the Gulf and the wider Middle East typically face. It is part of our international clients practice and describes the legal framework and how we work, without claims about individual team members' backgrounds or languages.

Sovereign wealth and family office investments

Sovereign wealth funds and state-owned investors from the region typically invest in Germany through minority stakes in listed companies, co-investments with private equity funds, direct acquisitions of infrastructure and energy assets, and real estate. They often seek board representation or information rights to protect their investment, and they usually prefer stable, long-term holdings over short-term trading. German company law allows shareholder agreements and, in a GmbH, tailored articles to grant such rights, while in an AG the supervisory board is elected by the general meeting and, in co-determined companies, partly by employees, so seats for investors depend on voting power and agreements with other shareholders.

Stakes in listed companies trigger disclosure obligations when voting rights reach or cross 3%, 5%, 10%, 15%, 20%, 25%, 30%, 50% and 75%, with notification to the issuer and BaFin within four trading days (§ 33 WpHG). Holders of 10% or more must also inform the issuer of the objectives of their investment and the origin of the funds used, unless the issuer's articles exclude this obligation (§ 43 WpHG). Acquiring control, defined as 30% of the voting rights, requires a mandatory takeover offer to all shareholders unless an exemption applies (§ 29 WpÜG). See our page on public takeovers.

Family offices

Family offices from the region invest in German real estate, Mittelstand companies, start-ups and funds. Typical issues include holding structures and their tax treatment, governance of portfolio companies, minority protection, exit rights and the transparency register, which requires disclosure of beneficial owners of German companies and of foreign companies holding German real estate. Investments in funds raise questions of the fund's regulatory status and the investor's categorisation under the Capital Investment Code. See our page on foundations, trusts and family offices.

Co-investments with private equity and infrastructure funds

Many investors from the Gulf deploy capital in Germany alongside private equity and infrastructure funds, either as limited partners or as direct co-investors in individual deals. Co-investment agreements should regulate information rights, consent rights on key decisions, transfer restrictions, tag-along and drag-along rights and exit coordination. For investment screening, German authorities look through fund structures to identify the ultimate controlling persons and significant influence, so the co-investor's role and rights must be described precisely in filings. Where several non-EU investors act together, their stakes can be combined for screening purposes.

Tax treaties and holding structures

Germany's network of double tax treaties with states in the region is not uniform, and some investor jurisdictions have no treaty with Germany in force. Withholding taxes on dividends and interest, and the taxation of capital gains on German real estate and shareholdings, therefore depend on the investor's jurisdiction and holding structure. Holding companies in EU or treaty countries are often used, but German anti-treaty-shopping rules deny relief to companies without sufficient substance. Some sovereign investors may claim immunity-based or treaty-based exemptions, which need to be examined individually with tax advisers.

Investment screening of Middle East investors

Investors from outside the EU, including from the Gulf, are subject to German investment screening. Acquisitions of 10% of the voting rights in operators of critical infrastructure and other listed sectors, 20% in further listed technology sectors and 25% in other cases can be reviewed by the Federal Ministry for Economic Affairs and Energy, and in listed sectors must be notified and may not close before clearance (§ 56 AWV).

In assessing whether an acquisition is likely to affect public order or security, the ministry may consider whether the acquirer is directly or indirectly controlled by the government, including other state bodies or armed forces, of a third country (§ 55a(3) AWV). Sovereign wealth funds and state-owned companies should therefore expect detailed questions about their governance, decision-making independence and the state's role.

Transparent information about the investment mandate, governance and exercise of voting rights, and willingness to accept mitigation measures where needed, help clearance. A ministry draft for a new Investment Screening Act was published for consultation in October 2026. The EU Foreign Subsidies Regulation can also require notification of acquisitions by state-owned investors where the EU target has turnover of at least EUR 500 million and the investor's group received more than EUR 50 million in foreign financial contributions in three years. See our page on foreign investment control and our insight on FSR notifications in M&A.

Executives, staff and residence

Investors who establish German holding or management companies often second executives and specialists to Germany. Nationals of most Gulf states need a residence title permitting employment, such as an EU Blue Card or an intra-corporate transfer card, and the accelerated skilled worker procedure can shorten processing. Managing directors of a German GmbH need not live in Germany, but they carry personal duties and liability under German law, including for tax payments, social security contributions and timely insolvency filing.

Board members appointed by investors to supervisory boards of German companies must act in the interest of the company, not only of the investor, and are bound by confidentiality, which affects the information they can pass on to the investor. Information flows should therefore be agreed in advance and structured to comply with these duties and, for listed companies, with insider rules.

Real estate investments

German real estate remains a major target for Middle East investors, from office towers and hotels to logistics and residential portfolios. Acquisitions are structured as asset deals, which require a notarised purchase agreement and registration in the land register, or as share deals. Real estate transfer tax applies to asset deals and, under statutory thresholds, to share deals: transfers of 90% or more of the shares in a property-holding company, or changes of 90% or more of the partners in a property-holding partnership within ten years, trigger the tax (§ 1 GrEStG).

Rates vary by federal state and are set by each state within the federal framework, so the location of the property affects transaction costs. Foreign companies that hold German real estate must register their beneficial owners in the German transparency register, and notaries must refuse to certify certain transactions if this has not been done.

Investors should also consider rental and tenancy law, which protects residential tenants strongly, building energy requirements under the Building Energy Act, financing structures and security, and the tax treatment of rental income and capital gains, which depends on the investor's structure and any applicable tax treaty. See our pages on real estate transactions and finance and our insight on real estate transfer tax in share deals.

Energy and hydrogen partnerships

Energy cooperation between Germany and the Gulf states has grown in importance. Germany is building a hydrogen core network approved in October 2024 and will need imports of hydrogen and derivatives such as ammonia and methanol, for which producers in the region are potential suppliers. The Hydrogen Acceleration Act of 29 March 2026 places import terminals, storage and pipelines for hydrogen and derivatives in the overriding public interest, which speeds up permitting.

Long-term offtake agreements for hydrogen and derivatives must address certification under EU rules for renewable and low-carbon hydrogen, pricing, delivery and change-in-law risks. LNG supply agreements and investments in German renewable energy projects and utilities are further areas of cooperation. See our page on hydrogen, CO2 storage and decarbonisation.

Investments in German energy infrastructure are subject to investment screening at the 10% threshold for critical infrastructure operators, and to energy regulation, including unbundling rules for network operators. Partnerships with municipal utilities raise public law, budget law and procurement questions.

Sports, hospitality and consumer brands

Investors from the region have shown interest in German hotels, sports and consumer brands. Hotel investments combine real estate law with management or lease agreements with operators, which allocate operating risk differently and need careful drafting of performance tests, termination rights and capital expenditure obligations. In German professional football, the governing body's rules limit the influence of external investors in clubs, which affects how investments in club companies can be structured; these association rules have also been reviewed by the Federal Cartel Office. Acquisitions of consumer brands raise ordinary M&A, IP and distribution questions.

Sharia-compliant structures

German law contains no specific rules on Islamic finance, but Sharia-compliant transactions can be structured within general civil, tax and supervisory law. Common structures include murabaha (cost-plus sale), ijara (leasing), musharaka and mudaraba (partnership-based financing) and sukuk (asset-based certificates). In real estate, ijara structures can lead to two transfers of the property, so real estate transfer tax may arise twice unless the structure is designed carefully. Profit elements that economically resemble interest may be treated like interest for tax purposes, including the interest barrier.

Where financing is provided to German borrowers on a commercial basis, the lender's activity may require a banking licence or fall under an exemption. Sukuk issued or offered in Germany are subject to prospectus rules and, depending on structure, securities law. Early coordination between Sharia advisers, German lawyers and tax advisers is essential, and documentation should explain the economic substance of each step so that German courts and tax authorities can classify it correctly. See our page on financial regulation and BaFin licensing.

Disputes, enforcement and data

For contracts with parties from the Middle East, arbitration is usually the preferred method of dispute resolution, because Germany and the Gulf states are parties to the New York Convention, so awards can be enforced in both directions. Institutions such as the ICC, the DIS and regional centres are used, and the seat, language and governing law should be agreed expressly.

Recognition of court judgments from the region in Germany depends on the conditions of § 328 ZPO, including reciprocity (§ 328 ZPO). Personal data transfers from Germany to states in the region generally require standard contractual clauses and transfer impact assessments, since the EU has not adopted adequacy decisions for Gulf states. See our page on international arbitration.

Compliance and know-your-customer requirements

German banks, notaries and other obliged entities must identify the beneficial owners of their clients and apply enhanced due diligence to politically exposed persons, which can include senior officials and members of ruling families who are involved in sovereign investment vehicles. Investors should expect detailed questions on the source of funds and ownership, and should prepare documentation that can be reused across transactions. Sanctions screening and export control rules also apply where investments involve sensitive technology or counterparties subject to EU sanctions. See our page on compliance, investigations and ESG.

How our Middle East desk helps

Our Middle East desk advises sovereign wealth funds, state-owned companies, family offices and corporates from the Gulf and the wider Middle East on their investments in Germany. We advise on acquisitions of stakes in listed and private companies, investment screening and FSR notifications, real estate investments and their structuring, energy, hydrogen and infrastructure partnerships, and Sharia-compliant structures together with Sharia and tax advisers. We support governance of portfolio companies and represent clients in German courts and arbitration. To discuss your plans, please contact us. This page provides general information, not legal advice.