If a foreign company operates a branch office in Germany (business office, factory, etc.), its profits must be taxed in Germany. The taxes incurred depend on the legal form of the company. They correspond to the taxes that a company with the corresponding German legal form would have to pay.
The profits of the branch which is taxed in Germany is either exempt from taxation in the other State or is subject to taxation there, in which case the tax paid in Germany is charged against the corresponding tax of the other State. Details are provided in the Agreement for the Avoidance of Double Taxation (DBA) concluded by Germany with the other State.
In particular, income tax or corporation tax, solidarity surcharge, payroll tax, trade tax and value-added tax are payable.
Please note: For tax & legal advisory please refere to our cooperation partner Counselhouse.