The taxation of companies in Germany is done in two stages:
At the first level, corporate entities such as public limited companies or limited liability companies are subject to corporate income tax whereas partnerships such as GbR, oHG or KG are subject to income tax. Both the corporate income tax and income tax are types of taxes with uniform nationwide tax rates.
At the second level, corporations as well as partnerships pay commercial tax. The commercial tax is a municipal tax in which the respective tax rates are determined individually by the municipality, so the commercial tax rates vary from one municipality to another.
The average total corporate tax load is less than 30%, which is below that of other major industrialized countries. In some parts of Germany it is below 23% due to the variable local commercial tax rate.
A double taxation of profits generated by international companies in Germany can be avoided on the basis of various double taxation agreements. For further information about legal & tax solutions in Germany please contact our cooperation partner Counselhouse.