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Corporate Taxation in Germany

Germany offers a competitive system of corporate taxation. The average tax burden is just under 30 percent, with a number of municipalities offering lower rates.

All corporations – including the limited liability company (GmbH), the stock corporation (AG) and German permanent establishments of foreign corporations – are subject to corporate income taxation. Income taxation of corporate companies generally consists of three components: corporate income tax, solidarity surcharge, and trade tax.

Due to locally set varying trade tax levels, there is no consistent nationwide tax rate for corporate income taxation. Corporate income tax rate plus solidarity surcharge are however determined nationwide. Many municipalities offer combined corporate tax rates below 25 percent. The German corporate tax average is around 29.9 percent.

  • All corporations are liable to corporate income tax. This is levied at a flat nationwide rate of 15 percent on the taxable profits of the company.

  • All commercial business operations are liable to trade tax. Although trade tax is regulated by federal law, it is a municipal tax with rates varying at the municipal level.

  • Germany provides an extensive network of double taxation agreements to ensure that double taxation in international business can be avoided.

  • Value-added tax (VAT) is a consumption tax on the exchange of goods and services. Companies are obliged to add VAT to their prices and to invoice their customers accordingly.

  • Every property owner in Germany is liable to pay real property tax (Grundsteuer). The tax rate depends on the type of real property. 

  • Companies must submit a tax return to the tax authority once a year. The tax office at the location in which the corresponding company has its (German) head office is responsible.

  • The German tax system offers companies tax deduction possibilities to lower their annual tax burden - subject to certain preconditions being met.

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