Corporate Tax in Germany
- Tax Base For Resident and Foreign Companies
- Resident and non-resident companies are charged in the same way concerning consumption tax.
|The corporate tax (Körperschaftssteuer)||The standard rate is 15%.
The effective corporate tax rate including trade tax and solidarity tax (5.5%) is about 30-33%.
|Trade tax (Gewerbesteuer) is also assessed on companies. This tax is discharged by any person (physical or moral) carrying on a commercial activity or industrial in Germany. Trade tax is a deductible expense as a running cost for corporate income tax purposes. The trade tax amount depends on the rate voted by the concerned municipality, multiplied by a coefficient.||The effective rate varies from 14% to 17% depending on the municipality.|
- Tax Rate For Foreign Companies
- There is no distinction between German companies and foreign companies. At the municipal level, all companies are subjected to the commerical tax which is at the rate of 3.5%, whereas the company tax is set at 29.8%. For commercial partnerships, all income above EUR 7,664 is taxed at 15%.
- Capital Gains Taxation
For capital gains on asset disposal, there is a single tax rate of 15% (+ a surcharge of 5.5%).
Capital gains from share transfer in resident and non-resident subsidiaries are exempt from corporate tax up to 95%, whatever the stock and the length of time it has been held.
- Main Allowable Deductions and Tax Credit
- Companies can carry forward their former loss limited to EUR 511,500. Furthermore, they can carry forward their loss on the payment of interests which is deductible up to 30% of the EBITDA (Profits before interest, tax, depreciation and amortization).
- Other Corporate Taxes
- In addition to federal and lander taxes, municipal taxes apply, at varying rate from one municipality to the other.
Country Comparison For Corporate Taxation
|Number of Payments of Taxes per Year||16.0||14.2||11.0|
|Time Taken For Administrative Formalities (Hours)||215.0||199.3||187.0|
|Total Share of Taxes (% of Profit)||48.2||43.0||46.8|
Source: Doing Business
Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action. **** The Greater the Index, the Higher the Level of Investor Protection.
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