In Germany, the Corporate Income tax rate is a tax rate paid by businesses. Private and public corporations that make profits in Germany are required to pay taxes, as well as other analogous legal entities such as foundations, cooperatives, and associations.

In this system, local and foreign companies are subjected to the same tax policy. A company is susceptible to taxing in Germany if it is managed or registered in Germany, regardless of its area of incorporation.

These tax proceeds are then dispersed to Germany’s three levels of government: the federation, the states, and the municipalities.

Corporate Taxes in Germany

The German Tax System

The overall German corporation tax, also known as Körperschaftsteuer is currently set at 30%. The overall income tax rate for businesses includes corporate income tax at a rate of 15%, an obligatory additional fee at a rate of 0.825% (5.5% of the corporate income tax), and local trade tax. The local trade tax largely varies between 7% and 21%, with charges determined by cities.

The Timeline of Corporate Taxes in Germany

The scale used as a determinant is the maximum rate for Corporate Revenue. Returns from the Commercial Tax is a major source of income for the government of Germany. Below are the tax rates in Germany over the years.

2003-  39.58%           2004-  38.29%

2005-  38.31%           2006-  38.34%

2007-  38.36%           2008-  29.51%

2009-  29.44%           2010-  29.41%

2011-  29.37%           2012-  29.48%

2013-  29.55%           2014-  29.58%

2015-  29.72%           2016-  29.72%

2017-  29.79%           2018-  30.00%

2019-  30.00%

Calculating Corporate Tax in Germany

The customary “profit” tax rate for corporations in Germany is 15%. The levies are imposed at the national level. Only 5% of the capital gain from the sales of shares and stocks by a foreign company or German company is subject to tax when received by a company taxable in Germany.

There is also an obligatory “solidarity tax”, to aid the unification of the two Germanys (East Germany and West Germany). The rate of this obligatory tax is 5.5% of the customary rate payable. i.e. if a corporation earns let’s say EUR 10,000, the customary tax would be EUR 1,500. The 5.5% obligatory “solidarity tax” applies only to the EUR 1,500. Altogether, there is a 15.825% tax rate on corporations.

Corporate tax payment can be done through the following channels:

Before taxes are paid, revenues must first be declared. This declaration can be done manually or online.

  1. Tax declaration forms can be collected from the local tax office or printed online. They are then filled and the amount filled in the forms are paid in banks
  2. Tax payments for corporate businesses can also be made online, which is usually quicker and easier than using paper forms. After the profit returns are declared online, 15.825% (including the solidarity tax) will be paid. Foreign companies, who might be needing to do a transaction from a foreign bank; might need to take into consideration any charges that will be added to the transaction. Sometimes, these changes are significant.