Germany Tax Guide

Germany

Currency: Euro

Foreign Exchange Control: No restrictions however a declaration must be filed with customs for transfers of more than EUR 10,000.

Accounting Principles: German commercial GAAP/IFRS. Financial statements prepared annually.

Business Entities: Principally, joint stock company (AG), limited liability company (GmbH), general and limited partnership, sole proprietorship and branch of foreign corporation.

Corporate Taxation

Residence: If maintain a registered office or central place of management in Germany.

Basis: Residents are taxed on worldwide income. Non-residents are taxed on German-source income.

Rate: 15%. Municipal trade tax is typically between 14% – 17%.

Foreign Tax: Foreign tax may be credited against German tax that relates to the foreign income. The exemption system is typically applied.

Other: Incentive programs are available e.g. for the purchase or production of movable assets in Eastern Germany.

Tax Year: The shorter of 12 months or the period of accounts.

Personal Taxation

Residence: Residents taxed on worldwide income. Non-residents taxed on German-source income (resident if have a habitual abode or permanent accommodation in Germany, the accommodation does not need to be used).

Rate: Progressive up to 45%. Also solidarity surcharge of 5.5% and church tax of 9%.

Capital Gains: Sale of real estate and private property subject to capital gains if owned for less than 10 years. Sale of other assets is taxable if held for less than 1 year. Normal tax rates apply.

Other: Real property tax: Levied by municipalities at 0.35% multiplied by the municipal coefficient.

Inheritance tax: 7% – 50% with various exemptions

Social Security: Employees and employers make equal contributions for pension, health and unemployment insurance.

VAT: Standard rate 19%

Member Firm: Kraatz Sondermann Martius GmbH

Email:
Kurt Sondermann: sondermann@buse.de