Iraq Company from Germany 2026: the Siemens Pipeline

Germany's presence in Iraq is written almost entirely in electricity, and it is written at scale.

Siemens Energy has signed with Iraq's Ministry of Electricity to develop 14 GW of new gas-fired generation capacity, built as combined-cycle plants running primarily on locally sourced gas, including gas currently flared during oil production. Alongside it sit the rehabilitation of the 340 MW Dibis plant, work at Al-Musayyib covering 750 MW of existing units plus 150 MW of addition, five high-voltage substations across Baghdad, Diyala, Najaf, Karbala and Basra, and a USD 1.3 billion contract with Orascom Construction to rebuild the Baiji power plant complex.

For a German Mittelstand supplier, that is the corridor. Not operating plants, but selling into the programme that builds them.

Key facts for German founders

Germany cut the AStG threshold from 25% to 15% for 2024. Iraq taxes at 15%. That is not comfort, it is a zero margin, and the investment licence erases it.

The pipeline, and where a supplier fits

Two features of this pipeline matter for a supplier.

It runs on domestic gas, including flared gas. That ties the electricity programme to the gas capture work happening across the oil fields, which is why power and upstream procurement overlap and why the tax perimeter question below is live.

German state financing appears in it. KfW, the German development bank, has been reported as financing project work in this space. That is worth pursuing project by project rather than assuming, and it is a channel most competitors from other origins do not have.

Can a German resident legally own an Iraqi company?

Yes, up to 49% of a federal LLC, since Law No. 17 of 2019 requires Iraqi shareholders to hold at least 51%. Full ownership is available in the Kurdistan Region following its January 2022 amendments, and is understood to be available through an investment licence, with that point not fully settled.

Every foreign shareholder, individual or corporate, clears a Ministry of Interior security check before being recorded, which is why federal registration is quoted as six to twelve weeks.

The German analysis, which is unusually simple

1. 1Hinzurechnungsbesteuerung: on the lineThe threshold is a burden of less than 15%. Iraq is taxed at 15%, so a fully taxed Iraqi company sits outside by zero margin, and the 35% oil and gas rate is clearly outside.
2. 2The investment licence reverses itA project licensed by the National Investment Commission is exempt for up to ten years. An effective rate of zero is below 15%, which places the entity inside the regime the statutory rate kept it out of.
3. 3Geschäftsleitung: still the issueUnder §10 Abgabenordnung a company managed in fact from Germany can be treated as German resident whatever the register says. That test does not care about the Iraqi rate at all.

The consequence most German guidance misses. The AStG threshold was lowered from 25% to 15% by the minimum tax implementing legislation, for financial years beginning in 2024. That change made Iraq borderline rather than comfortable: 15% is not above 15%, it is on it, and it escapes only because the statute says less than 15%.

Which means the incentive and the exposure point the same way:

• A fully taxed Iraqi company at 15% sits outside the regime, with no margin at all.
• A project with an investment licence is exempt for up to ten years, so its effective rate is zero and it sits inside.
• Any Iraqi mechanism that reduces the effective burden below 15% has the same effect, whatever its label.

Take the German advice on the licence before applying for it, not after. Detail on the licence in Iraq corporate tax.

The other practical consequence for a German group is that the Iraqi entity should be genuinely run from Iraq: real premises, decisions taken and minuted there, and a manager who manages. That is the same discipline required in every jurisdiction, with the difference that here it is the only German question rather than one of two.

Separately, export control and end-use screening applies to power and industrial equipment sold into the region, and it belongs at the contracting stage rather than at shipping.

The Iraqi rate question

Iraq taxes at 15%, but 35% applies to income from contracts with foreign oil companies, their branches and offices, and subcontractors working in oil and gas production and related industries.

For a power supplier the boundary is genuinely live, because the generation programme runs on gas captured at oil fields. Establish which side your contract sits on before pricing:

• Generation and grid work outside the production perimeter is likely at 15%, and should be confirmed.
• Work performed for or alongside upstream operations may pull into 35%, since the scope reaches subcontractors and related industries.
• Non-upstream industries contracted with oil and gas companies face 15% plus a retention of 3.3% or 7% on payments.

How the tax is actually computed, using deemed profit percentages by contract type rather than your real margin, is in Iraq corporate tax.

The Iraqi side, in short

1. Establish whether you are trading with Iraq or in it, which decides whether an entity is needed at all.
2. Choose the route: branch against a qualifying contract, LLC at 49%, or a Kurdistan entity.
3. Clear the Ministry of Interior check for every foreign shareholder.
4. Deposit IQD 1,000,000 in an Iraqi bank, verified at registration.
5. Appoint a managing director and a deputy, with a resident manager.
6. Obtain the tax identification number early, because it gates the official currency channel.

Full sequence in how to register a company in Iraq.

When Iraq makes sense from Germany, and when it does not

14 GWof new combined-cycle generation capacity contracted with the Ministry of Electricity

USD 1.3bnthe Baiji power plant complex rebuild with Orascom Construction

5high-voltage substations across Baghdad, Diyala, Najaf, Karbala and Basra

Common mistakes from Germany

• Worrying about the Außensteuergesetz. It is the wrong concern here, and it distracts from the management question that does apply.
• Running the entity from Germany, which puts the Geschäftsleitung test in play regardless of the Iraqi rate.
• Assuming 15% because you sell power equipment, when the generation programme runs on gas captured at oil fields and the 35% scope reaches subcontractors in related industries.
• Assuming KfW financing applies across a programme. It has been reported for specific projects and should be confirmed one by one.
• Treating export control as a shipping step rather than a contracting condition.
• Leaving the Iraqi tax identification number late, which blocks the official dollar rate.

What a German supplier should settle before quoting:

• Which side of the 35% perimeter the contract sits on, since power and upstream procurement overlap in this programme.
• Whether a KfW financing route exists for that project, pursued project by project rather than assumed.
• Where the Iraqi entity is actually managed, because §10 AO looks at the facts rather than the register.

The bottom line, and how CorpSec helps

Germany's Iraq story is electricity: 14 GW of new capacity signed, a USD 1.3 billion reconstruction at Baiji, plant rehabilitations and substations, running on domestic and previously flared gas. A German supplier's opportunity is inside that procurement, not beside it.

The German tax analysis has two moving parts rather than one. Iraq at the statutory rate sits outside the CFC regime by exactly nothing, and an investment licence moves it inside. Alongside that sits the ordinary discipline about where the company is run and about which side of the 35% perimeter your contract falls. Settle the second with an Iraqi adviser and the first with your Steuerberater, then pick the entity.

CorpSec structures Iraqi entries end to end, in federal Iraq and the Kurdistan Region, alongside your German advisers.