Every location decision is ultimately a price-performance question: what does the state cost, and what does it deliver for that? For Germany both sides can now be answered with official figures — and in 2025 the ratio crossed a symbolic threshold. More than every second euro generated now runs through public accounts, while what comes back is weakening at every visible point: on the rails, in the hospitals, on the electricity bill, in the insolvency register. Here are the numbers to reckon with before deciding on your own location.
What the state costs
The government spending ratio — total state expenditure relative to economic output — stood at 50.3 percent in 2025, crossing the 50 percent mark for the first time since the pandemic years of 2020 and 2021. More than every second euro generated in Germany therefore runs through public accounts.
On the labour-income side the counterpart is a tax wedge of 49.3 percent for single average earners — rank 2 among 38 OECD countries and roughly 14 percentage points above the OECD mean of 35.1 percent. Within a single year that figure rose by 1.34 percentage points. What 2027 and 2028 add — a new 47 percent bracket, a lowered wealth-rate threshold, a health-insurance surcharge — is set out in German Tax Reform 2026.
What it delivers in return
| Indicator | Value | Context |
|---|---|---|
| Health spending per capita | EUR 5,414 | highest in the EU, around 50% above average |
| Health share of GDP | 11.8% | highest share in the EU |
| Life expectancy | 81.2 years | below the EU average for the first time, 2.6 to 3 years behind Spain, Italy and Switzerland |
| Household electricity | 38 ct/kWh | most expensive in Europe (EU-27 average: 29 ct) |
| Corporate insolvencies 2025 | 24,064 | highest since 2014, +10.3% year on year |
| All insolvency proceedings 2025 | 101,283 | corporate and consumer combined — around 277 per day |
| Education spending | 4.4% of GDP | below the OECD average of 4.7% |
Health: the most expensive system, a below-average result
This is the most telling figure in the whole table. Germany spends EUR 5,414 per inhabitant on health — the highest in the EU and roughly 50 percent above the EU average — and at 11.8 percent of GDP leads on the proportional measure too. The result: life expectancy of 81.2 years, which has fallen below the EU average for the first time, trailing Spain, Italy and Switzerland by 2.6 to 3 years.
Europe’s most expensive health system therefore delivers a below-average outcome. The state of the providers fits the picture: around 80 percent of hospitals are loss-making, 88 clinics filed for insolvency between 2020 and 2024, and statutory health insurance carries a deficit of roughly EUR 19 billion — answered with a savings package and a contribution surcharge from 2028.
Energy: Europe’s most expensive household electricity
At 38 cents per kilowatt hour, Germany was Europe’s most expensive electricity market in 2025 — up from 28.06 cents the year before, a jump of over 35 percent within a single year, against an EU-27 average of 29 cents. Belgium (36 ct) and Denmark (35 ct) follow; at the other end sits Hungary at 10 cents.
One precision that belongs in the balance sheet: on industrial electricity Germany is expensive but not the leader. In the second half of 2025, German industrial customers in the 500–1,999 MWh band paid around 18.28 ct/kWh, while Ireland topped the EU at 24.78 ct/kWh.
Insolvencies: 277 proceedings a day
The insolvency statistics show the scale on two measures.
Corporate insolvencies. In 2025 the courts registered 24,064 corporate insolvency filings — 10.3 percent more than the previous year and the highest level since 2014. Before that the number had already risen by more than 20 percent two years running (2023: +22.1%, 2024: +22.4%). Creditor claims from the cases reported in 2025 total roughly EUR 47.9 billion. The trend continues: January 2026 saw 1,919 filings (+4.9%), April 2026 saw 2,276 (+7.1%).
All insolvency proceedings. Adding consumer insolvencies — 77,219 in 2025, up 8.4 percent — gives 101,283 new insolvency proceedings for the year, an average of around 277 per day. The broadest Destatis series, which additionally counts formerly self-employed persons and estate insolvencies, runs higher still on a monthly basis: between spring 2025 and spring 2026 it moved in a range of roughly 10,400 to 12,600 proceedings per month, peaking in July 2025 (12,597) and March 2026 (12,531).
More than 100,000 insolvency proceedings in a single year, 277 every day: that is not a cyclical dip, it is a permanent condition.
What sits on the other side
The figures above describe what remains if you stay. The other side of the calculation is rarely drawn up — yet it is the actual reason people leave.
Time. In the third quarter of 2025 roughly 4.72 million employees in Germany worked a second job — 11.2 percent of all employees, a figure that has nearly tripled in twenty years. For millions the second job is not self-fulfilment but household arithmetic. Changing location buys that time back first.
Money that is left over. Living costs in Georgia run roughly 46 to 55 percent below German levels depending on the survey. Rents in Tbilisi are 56.6 percent lower than in Berlin, consumer prices excluding rent 46.6 percent, restaurant visits 41.6 percent; a modern flat costs EUR 200 to 350 a month. Combined with 1 percent tax on turnover under the Small Business Status, that is not an improvement at the end of the month but a different order of magnitude: saving becomes possible again, and with it holidays, provision and investment.
And the direction of travel. Staying means pricing in the counter-movement: from 2027 the minijob flat tax rises from 2 to 5 percent; 2027/28 bring the wealth-rate threshold cut to EUR 250,000 and the new 47 percent bracket; from 2028 comes the 2.5 percentage point surcharge for covered spouses against a contribution ceiling raised to EUR 85,000. At the same time statutory health insurance is saving EUR 16.3 billion by 2027 and EUR 42 billion cumulatively by 2030. More contributions for fewer benefits is not a forecast — it is the agreed direction.
What follows from it
The balance is not a snapshot but a multi-year trend: a government ratio above 50 percent, a tax wedge at rank 2 in the OECD and still rising, three consecutive years of rising insolvencies, Europe’s most expensive household electricity, and the EU’s most expensive health system delivering a below-average result. That conclusions are being drawn is measurable: 14 percent of German adults — roughly 8.2 million — plan to leave within five years according to INSA, rising to 27 percent among 30-to-39-year-olds.
For location-independent business models the alternative is concrete and has been tested for years. What it looks like, which building blocks it has and where its limits lie is set out in Germany is quietly falling apart and — for the decisive question of why a company without relocation achieves nothing — in Georgian company, German authorities. Anyone planning the timing should first read Emigration: 8.2 million Germans: exit taxation under § 6 AStG is measured on company value at the moment of departure and gets more expensive with every year of growth.
Asset holders should additionally know German wealth levy: EUR 2.8 trillion — the wealth tax was never abolished, only suspended. Austrian readers face a different legal position with one costly quirk on moving to third countries: Leaving Austria.
Frequently asked questions
FAQ
What is Germany’s government spending ratio?
According to the Federal Statistical Office it stood at 50.3 percent of economic output in 2025, crossing the 50 percent mark for the first time since the pandemic years 2020 and 2021. More than every second euro generated in Germany therefore runs through public accounts.
How many insolvencies are there in Germany?
Corporate and consumer insolvencies together came to roughly 101,283 proceedings in 2025 — an average of 277 per day. Companies account for 24,064 of those, the highest level since 2014 and the third consecutive annual rise, with creditor claims of around EUR 47.9 billion. The broadest Federal Statistical Office series, which additionally captures formerly self-employed persons and estate insolvencies, runs at 10,400 to 12,600 proceedings per month.
Are German energy prices the highest in Europe?
For household electricity, yes: 38 cents per kilowatt hour in 2025 against an EU-27 average of 29 cents — up from 28.06 cents the year before, a jump of over 35 percent within a single year. On industrial electricity Germany also sits in the upper group at 18.28 ct/kWh in the 500 to 1,999 MWh band.
Why is life expectancy falling despite the highest health spending?
Germany spends EUR 5,414 per inhabitant on health — the highest in the EU and roughly 50 percent above average — and at 11.8 percent of GDP leads on the proportional measure too. Life expectancy of 81.2 years has nonetheless fallen below the EU average for the first time, trailing Spain, Italy and Switzerland by 2.6 to 3 years. Most expensive system, below-average result — alongside roughly 80 percent loss-making hospitals and a statutory health insurance deficit of about EUR 19 billion.
Is it still worth running a company in Germany?
For place-bound operations the question stays complex. For location-independent business models — software, consulting, agencies, e-commerce, digital products — the arithmetic increasingly says no: a tax wedge at rank 2 in the OECD, a new 47 percent bracket from 2027/28, above 50 percent marginal burden for sole traders, plus EUR 146 billion a year in bureaucracy costs. A Georgian structure at 1 percent of turnover, or on the Estonian model, is the obvious alternative.
Do I still pay German tax if I no longer live there?
After a clean departure, generally not on an unlimited basis — but there are trailing rules that catch many people out. Exit taxation under § 6 AStG taxes holdings from 1 percent as though you had sold at the moment of departure, and since 2025 ETF and fund units fall within scope too. Under § 2 AStG, German nationals can face extended limited tax liability for up to ten years after the year of departure where substantial economic interests remain in Germany. Anyone who genuinely winds those interests down does not meet the conditions — which is exactly why the planning belongs before the move.
This article is general information and does not constitute legal or tax advice. The figures come from the Federal Statistical Office (government ratio, corporate insolvencies), the OECD (tax wedge, Education at a Glance 2025, Health at a Glance), Eurostat and the EU Country Health Profile, and from the insolvency statistics of the German courts. As of August 2026, subject to changes in the data.