I'm surprised more American businesses aren't picking somewhere like Amsterdam if they're wanting to set up shop in continental Europe, especially with its lower immigration barriers for non-European entrepreneurs.
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Germany is no(t much) better or worse than other EU countries in terms of bureaucracy or immigration barriers. To deal with legal/ tax/ privacy stuff, you would mostly set up a formal HQ in Ireland, Luxemburg or Switzerland (the latter being home to Groupon EU's legal HQ).
The comparatively low salaries across the board in Berlin coupled with the potential for subsidies from the state make it a good proposition to have a working office. (If you're looking for engineers and highly skilled staff, Zurich and Munich still have an edge but are much more expensive.) Berlin is also large enough to have a talent pool for most positions/ departments and is growing due to perceived and/ or real attractiveness. And with the influx of young people from all over the world, informal immigration barriers like language are vanishing, too.
This would indicate that that is not entirely true:
http://www.doingbusiness.org/rankings
My more subjective impression during two years in Austria was that it's just about as bureaucratic as Italy, just that they tackle it with more efficiency. I imagine Germany being similar.
Opening a company in Germany, for instance, is not as cheap/simple as an LLC in many US states or an Ltd in the UK.
I think it's time for killing the "Berlin is dead cheap" myth
If I start guessing - probably a better startup community. Amsterdam and Netherlands are corporation-friendly, with quite some big companies having headquarters there; but startups and corporations have different needs and make different communities.
UPDATE: Another point I can think of is the size of local market.
Maybe not too important for web startups that go global right away, but if you start locally (and thus use Dutch), you have 16M people in the Netherlands (+maybe 5 in the Dutch part of Belgium), while in Germany you get 82M, five times as much; plus another 8M in Austria and some more German speakers from Switzerland.