Definition of tax obligations

Corporations that have their registered office or management in Germany are, in principle, liable to tax on their worldwide income. Corporations are share capital companies (Kapitalgesellschaften), such as a limited liability company (Gesellschaft mit beschränkter Haftung, GmbH).

Corporations that have no registered office or management in Germany may be liable to tax in Germany if they receive domestic income. An example of this is profits from domestic branches and permanent establishments.

Among other things, company profits, capital gains and investment income are taxable. Capital gains may be tax-exempt in certain circumstances.

Types of business taxes in Germany

Corporate profits in Germany are subject to corporation tax at the rate of 15%. The tax amount is also subject to a solidarity surcharge of up to 5.5% above a certain tax threshold. In addition, the municipalities levy business tax on corporations that maintain a permanent establishment in Germany. Overall, the average tax burden for companies is around 30%.

The tax authorities of the federal states are responsible for enforcing and implementing tax legislation.

The corporation and business tax return must be filed annually, by 31 July of the following year. If the returns are drawn up by a tax adviser, this filing deadline is the end of February of the second following year. The declarations must be submitted electronically to the tax office.

Once determined by the tax office, advance payments of corporation tax must be made on a quarterly basis.

Corporations must, in principle, keep accounts. Together with the tax return, an electronic balance sheet (E-Bilanz) must be sent to the tax office.

Federal Ministry of Finance