German corporate tax

Partnerships such as the civil law partnership (GbR), the general partnership (OHG) and the limited partnership (KG) are not treated as corporations or as independent legal entities, but are regarded as association of individuals as shareholders. The shareholders themselves are bearers of all rights and obligations. The partnership carries limited rights and obligations.

Accordingly, the partnerships are not taxed (as in the case of corporations), but the individual shareholders are taxed, whereby the personal income tax rate of the respective shareholders is decisive. Only the taxable profit is calculated at company level and distributed to the shareholders according to the shares.

In principle, both retained and distributed profits of a private company are subject to income tax.


  • Income tax rate
  • Solidarity surcharge
  • Harmonization of the taxation of corporations and partnerships
  • Income tax rate

Income tax rate

The income tax rate starts at

  • at 14 % for income in exceeding of the annual base amount of EUR 8,820,
  • and increases progressively up to a maximum tax rate of 42% (as from an annual income of EUR 54,058).
  • A 45% tax rate which is increased by a surcharge applies to every euro which exceeds an annual income of EUR 256,303.

Solidarity surcharge

Like the corporate tax, the income tax is also subject to the solidarity surcharge. 5.5% of the respective personal income tax rate of the shareholder is added to the income tax as a solidarity surcharge.

Please note: If the average income tax rate of a shareholder is 30%, the solidarity surcharge amounts to 1.65%, which is again added to the average income tax rate (i.e. a total of 31.65%).

Harmonization of the taxation of corporations and partnerships

The tax rate that applies to shareholders in a partnership can optionally be adjusted to match the tax rate of corporations.

  • The commercial tax paid on (retained and distributed) profits can be deducted to a certain extent from the income tax liability (see also the chapter on commercial tax).
  • To avoid the progressively increasing rates of income tax, partnerships can apply for a flat tax rate of 28.25% plus solidarity surcharge for all retained earnings (i.e. a total of 29.8%). This corresponds to the average total tax load of a corporation.

Please note: If the retained earnings taxed with this flat tax rate are distributed to the shareholders at a later date, a subsequent taxation of 25% is required at the level of the shareholders under certain circumstances.

Consultinghouse - Martin Wilke

Martin Wilke

Managing Director
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