Corporate Tax in Germany

In Germany the corporate tax is applied on German companies’ global income or on foreign companies’ income made on German territory.  Germany’s average corporate tax revolves around 30%, but local municipalities levy lower tax rates.

Companies subject to the corporate tax in Germany

The most employed types of companies subject to the corporate tax (Körperschaftssteuer) are the German limited liability company (GmbH) and the stock corporation (AG). Separately, personal partnerships are subject to the personal tax income (Einkommenssteuer) in Germany. The income tax is levied at federal level. However, all commercial businesses (but not liberal professions) are subject to the trade tax (Gewerbesteuer), levied at municipal level.

 The corporate tax in Germany

The limited liability company (GmbH) and the stock corporation (AG) that make profit or have a management board in Germany are subject to the corporate tax on the profit they make worldwide. Dividends received by a German corporation from a holding of at least 10% are effectively 95% exempt from corporate tax, whether German or foreign.Foreign companies that do not have a registered office or a management board in Germany will be subject to the corporate tax on the profit they make in Germany.

The corporate tax is set at a flat rate of 15% (to be reduced by one percentage point a year from 2028 to 10% from 2032) to which an additional solidarity charge applies (Solidaritätszuschlag). The solidarity surcharge was enforced in 1995 and it represents 5.5% of the corporate tax leading thus to a total corporate tax of 15.825%.German subsidiaries that repatriate profits to their parent-companies in other countries must pay a withholding tax (Kapitalertragsteuer) of 25% plus solidarity surcharge (26.375% in total).

Germany has double taxation agreements with other countries in order to avoid double taxation on profits. Dividends paid based on double taxation agreements are taxed at reduced rates of 5, 10 or 15% or can be exempt from taxation.

Personal income tax on partnerships in Germany

All types of partnerships in Germany (civil law partnership (GbR), the general commercial partnership (oHG) or the limited partnership (KG) ) are subject to the personal income tax.The personal income tax is levied in stages and starts with 14% on taxable income exceeding the basic tax-free allowance of 12,348 EUR (2026), raises up to 42% if a 69,879 EUR threshold (2026) is exceeded and reaches 45% if a 277,826 EUR threshold is exceeded. The additional 5.5% solidarity charge applies to the personal income tax only above an exemption limit (income tax of 20,350 EUR for single taxpayers in 2026), i.e. only for high earners.

Trade tax in Germany

All commercial businesses in Germany are subject to the trade tax (Gewerbesteuer); liberal professions (freelancers) are not.  The trade tax is set at municipal level and it varies between 7 and 17%. The German trade tax is calculated depending on the tax base which is 3.5% in Germany and the multiplier (Hebesatz) set separately by each municipality. The average multiplier is between 300 and 400% but no less than 200%.

We can also assist with the German VAT registration process.

By working with our German accountants you can rest assured that you observe the corporate taxation principles. We offer ongoing support and assistance for accounts preparation, submitting consolidated returns (if this practice is allowed for the company), filing the tax returns, and making the needed payments. We help companies comply with taxation so that they may avoid unnecessary penalties. 

If you want to open a company you and need details about the taxation system you can contact our law firm in Germany.