Corporate Taxes (Introduction)
Check this out if
- – you are interested in taxation in Germany
Introduction
Taxes are relatively high in Germany. There are several different taxes to consider: taxes for corporations, taxes for individuals, VAT (Value Added Tax), RETT (Real Estate Transfer Tax), Inheritance Tax (Gift Tax) and several minor taxes we’d rather not talk about at this stage.
Taxes for Corporations:
Roughly speaking, Corporations are taxed at 30% of their income in Germany. The tax however is levied on the income in total, not differenciating between kinds of income. Income is determined in accordance with German GAP. German GAAP roughly equals US GAAP.
Corporate Taxes consist of classical corporate tax (15%), Solidarity Surcharge (5.5% of corporate Tax, equals 0.825%) and Trade tax or Business Tax (between 7% and 21% depending on the local municipality). Therefore total corporate taxation in German ranges from 22.825% to 36.825%. Usually (even in bigger cities) it will be around 30%.
Not every kind of corporation is taxed with corporate taxes. Several entities in Germany are considered „Look-Through-Entities“ and will only be taxed with Trade or Business Tax, if their income is trade income. Other than that, Taxation is imposed on the level of the shareholder. If the shareholder is a corporation, the corporation will be taxed accordingly. If the shareholder is an individual, individual tax rates apply (see Taxes for individuals).
| Corporate Tax / Solidarity SC | Trade / Business Tax | |
| GmbH | Yes | Yes |
| AG | Yes | Yes |
| KGaA | Yes | Yes |
| Stiftung | Yes | If trade income |
| KG | No | If trade income |
| oHG | No | If trade income |
| GbR | No | If trade income |
Deadline
The deadline for filing the tax return in accordance with Section 149 (2) of the German Tax Code (AO) ends on July 31st of the following financial year. If, however, a company has engaged a tax consultant, the deadline is extended to December 31st of the following financial year.