Corporate Tax in Germany

Overview by
Tax Base For Resident and Foreign Companies
Resident and non-resident companies are charged in the same way concerning consumption tax. 

Tax Rate

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

  Germany OECD United States
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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