Tax services in Germany

The German tax laws change constantly. We keep track about tasks and identify opportunities & risks.

 

For VAT purposes usually monthly VAT returns have to be filed. For corporation tax and trade tax purposes annually tax returns are mandatory. Individuals and also subject to income taxes. Also, corporation tax and income tax are subject to a solidarity surcharge.

 

We are a team of well qualified and experienced tax advisers based in Munich and offer our tax services in the following fields - please select for further information:

 

• Tax consulting
• Tax compliance
• International tax
• VAT
• Inheritance tax

There are two types of income taxes in Germany applicable to businesses:

 

• Trade tax (applicable to all types of enterprises)

• Corporation tax (only applicable to corporations)

 

Trade tax is a municipal tax set at 3,5% multiplied with a municipal trade tax levy rate of 200% to 490% .

 

Only corporations are subject to corporation tax, which is a federal tax. The corporation tax rate is set at 15%. 

 

Depending on the local trade tax rate, the total income tax burden for corporations may range between approximately 23% and 33% of pre-tax income. This includes a so-called “solidarity surcharge” of 5.5% that is imposed on corporation tax resulting from the additional fiscal needs due to the ongoing reunification process in Germany.

 

Although the majority of German companies, especially the smaller ones, tend to prepare only one set of financial statements, there can be many differences between commercial and taxable income for technical reasons. In addition, such differences may occur because of accounting measures that are not accepted for tax purposes. For instance: 

• If gross inventories are priced below the minimum amounts accepted for tax purposes
• If inventory reserves are established at amounts exceeding the amounts allowed for tax purposes (e.g. anticipation of future price reductions, reserves based on “sound business judgment”)
• If accruals are not accepted for tax purposes (e.g. provision for anticipated losses, expense equalization accruals, repair and maintenance accruals, retrieval of pension reserves not accrued in the past)
• If write-downs of assets are disallowed for tax purposes because the impairment is regarded as nonpermanent.

The above deviations are in principle subject to deferred taxation.

 

Businesses subject to the bookkeeping and accounting obligations, if the profit exceeds EUR 60,000 or sales EUR 600,000 (Sec. 141 AO). Corporations always have accounting obligations for commercial and for tax purposes.