Direct taxation in Germany

1. Business Tax 1
Business Tax I.
Wahidullah Abedi

2. Summary
1. Taxation of corporation
1. The value-added tax
2. The public tax
3. The municipalities tax
2. Taxation of property
3. Import Taxation
3.1 Customs Duties
3.2 Import Vat
3.3 Excise Tax
3.4 Additional customs duties and agricultural components
4. Responsible Institution
5. Taxation across the EU borders
5.1 Germany
5.1.1.Set up your business entity
5.1.1.What profits do you pay company tax on?
5.2 Company tax in the EU

3. 1. Tax of corporation

4. 1. Tax of corporation
1.1 The value-added Tax (Umsatzsteuer)
- A tax of 19% into products bought by customer.

5. 1. Tax of corporation
1.2 The Public tax
There are 2 public tax on benefits for each type of company :
- Corporation tax (Körperschaftsteuer) of 15 % for capital company and 3.5% for
partnership.
- The Solidarity overload (Solidaritätszuschlag) for capital and partnership 5.5%
applied to the corporate tax.
For example a capital company will pay : 15% + (5% of 15%) = 15.825 %

6. 1. Tax of corporation
1.2 the municipalities tax (Professional tax)
Applied to the profit of the business according to the geographic place.
This rate results from the application of a multiplier (Hebesatz) which is 200% at least
multiplied by 3.5%.
Berlin example : 410% -> (410*3.5 = 1435) -> 14.35% of business tax

7. The municipalitie multiplier

8. 1. Tax of corporation
Final Total tax :
To conclude, the real rate of tax for capital company is between 30-33% (depends on the
professional tax) and between 12.6%-20.3% for partnership.

19. III. Taxation across the EU
borders

20. Germany
• Company tax rate is 15%,
• solidarity surcharge of 5.5%,
• municipal surcharge of between 14% and 17%

21. Germany
Set up your business entity
1. Register for company tax
2. Company tax return
3. Make company tax advance payments by the deadline
4. File the company tax return by the deadline

22. Germany
What profits do you pay company tax on? I.
• Doing business
• Investments
• Selling assets for more than they cost (chargeable gains)

23. Germany
What profits do you pay company tax on? II.
• The company is based in
Germany,
• The company is not based
in Germany

24. Company tax in the EU
• Should be paid by various types of
• companies,
• clubs,
• co-operatives and
• unincorporated associations
• The rules are set by national authorities

25. Taxes in the EU
• Towards fair, efficient and growth-friendly taxes
• The rules can be different for each member state
• The EU does however, oversee national tax rules in some
areas:
• the free flow
• don't have an unfair advantage
• don't discriminate against anyone from other EU
countries

26. Towards open and fair world-wide trade
• Most outward-oriented economy
• From 1999 to 2010, EU foreign trade doubled
• Now accounts for over 30% of the EU’s GDP

27. Sources III.
1. https://europa.eu/youreurope/business/taxation/business-
tax/company-tax-eu/index_en.htm
2. https://europa.eu/european-union/topics/taxation_en
3. https://europa.eu/european-union/topics/trade_en
4. https://europa.eu/youreurope/business/taxation/business-
tax/company-tax-eu/germany/index_en.htm
5. https://www.fas.usda.gov/regions/european-union

28. Source
7.https://www.zoll.de/EN/Businesses/Movement-of-goods/Import/Duties-and-taxes/Normal-customs-
clearance/Customs-Tariff/customs-tariff_node.html
8.https://ec.europa.eu/taxation_customs/dds2/taric/measures.jsp?Lang=en&SimDate=20191122&Area=
&MeasType=&StartPub=&EndPub=&MeasText=&GoodsText=&op=&Taric=9503001000&search_text=
goods&textSearch=&LangDescr=en&OrderNum=&Regulation=&measStartDat=&measEndDat=
9.https://www.zoll.de/EN/Businesses/Movement-of-goods/Import/Duties-and-taxes/Normal-customs-
clearance/Customs-Tariff/customs-tariff_node.html
https://www.bundesfinanzministerium.de/Web/EN/Issues/Taxation/taxation.html;jsessionid=3959B5F38C12D990D458FCED4D0FA
921.delivery1-replication

29. Source
10. https://www.destatis.de/DE/Presse/Pressemitteilungen/2017/08/PD17_287_71231.html
11. https://www.german-tax-consultants.com/german-taxes/value-added-tax-vat--umsatzsteuer.html
12.https://www.gtai.de/GTAI/Navigation/EN/Invest/Investment-guide/The-tax-system/Company-
taxation/trade-tax.html