Europe · GmbH
Germany company taxes
Germany's headline 15% corporate income tax (Koerperschaftsteuer) is misleadingly low — the rate that actually matters is the combined burden of roughly 30-33%. On top of the 15% you pay a 5.5% solidarity surcharge on that tax (taking it to 15.825% effective), and then municipal trade tax (Gewerbesteuer), which is a 3.5% base rate multiplied by each municipality's own Hebesatz (typically around 400%, so ~14% and higher in big cities). Add them together and a German GmbH/UG generally pays around 30% of profit, more in high-tax cities like Munich or Frankfurt. For a non-resident owner the second sting is on the way out: dividends paid by a German company are subject to 25% withholding tax plus the 5.5% solidarity surcharge (= 26.375% effective). A double-tax treaty usually cuts that materially — the U.S.-Germany treaty reduces it to 5% or 15%, and the EU Parent-Subsidiary Directive can take it to 0% for qualifying EU corporate parents — but the relief is not automatic; you have to claim it. One genuinely positive 2026 signal: a reform enacted in July 2025 will cut the 15% corporate rate by one point a year from 2028, reaching 10% in 2032, which will pull the combined burden down over time.
- Country
- Germany
- Topic
- Taxes
- Reviewed
- June 2026
By the Lanzamo Editorial Team · Reviewed June 2026 · How we research
| Tax | Rate | Notes |
|---|---|---|
| Corporate income tax (Koerperschaftsteuer) | 15% | Flat federal rate. Scheduled to fall 1 point/yr from 2028 (14%) to 10% in 2032 under the July 2025 reform. |
| Solidarity surcharge (Solidaritaetszuschlag) | 5.5% | Levied on the corporate income tax, not on profit — so it adds ~0.8 points, taking the federal layer to 15.825%. |
| Trade tax (Gewerbesteuer) | ~14-17% | 3.5% base rate x municipal Hebesatz (avg ~400%, min 200%, no cap). Higher in big cities; the main reason the combined rate exceeds 30%. |
| Combined effective corporate burden | ~30-33% | Koerperschaftsteuer + solidarity surcharge + Gewerbesteuer. Treat ~30%+ as the real rate, not 15%. |
| VAT (Umsatzsteuer) | 19% | Standard rate; reduced 7% for food, books, etc. No registration threshold for a non-established business making taxable supplies. |
| Withholding tax on dividends | 26.375% | 25% Kapitalertragsteuer + 5.5% solidarity surcharge. Reduced by treaty (US: 5%/15%) or to 0% under the EU Parent-Subsidiary Directive — must be claimed. |
Corporate tax: why 15% really means ~30%
A German GmbH/UG is hit by three stacked taxes on profit. First, 15% Koerperschaftsteuer. Second, a 5.5% solidarity surcharge calculated on that tax (so 5.5% of 15% = ~0.8 points), making the federal layer 15.825%. Third, municipal Gewerbesteuer: a uniform 3.5% base multiplied by the local Hebesatz, which averages just above 400% and is set by each city — that works out to roughly 14% in an average municipality and noticeably more in Munich, Frankfurt or Hamburg. Stack them and the all-in burden lands around 30-33%. The trade-tax multiplier means your effective rate genuinely depends on where your registered seat is.
VAT (Umsatzsteuer): 19% and the non-resident angle
Germany's standard VAT is 19%, with a 7% reduced rate for food, books and similar. A German-established GmbH benefits from a small-business exemption threshold, but a business with no German establishment that makes taxable German supplies generally must register and charge VAT from the first supply. Two mechanics matter for cross-border founders: B2B services bought from a non-German supplier are usually handled by the reverse charge (the German customer self-accounts for the 19%), and EU B2C distance sellers above the EUR 10,000 pan-EU threshold can use the One-Stop-Shop (OSS) to declare VAT centrally instead of registering in every member state. The VAT ID (USt-IdNr) is issued by the BZSt in the DE + 9-digit format.
Dividends and withholding for foreign owners
When your German company distributes profit, it must withhold 25% Kapitalertragsteuer plus the 5.5% solidarity surcharge — an effective 26.375% — before the money leaves Germany. That is the default even for a foreign shareholder. A double-tax treaty almost always reduces it: under the U.S.-Germany treaty the rate drops to 5% for substantial corporate holdings or 15% for portfolio investors, and an EU corporate parent meeting the EU Parent-Subsidiary Directive conditions can get 0%. Relief is claimed via a BZST exemption certificate or a refund — it is not applied automatically, so a non-resident owner who ignores it overpays and has to reclaim.
How a non-resident-owned company is taxed
A GmbH/UG is incorporated in Germany and has its registered seat there, so it is German tax-resident and taxed on its worldwide profits — your living abroad does not move the tax base offshore. (The mirror-image rule explains why this jurisdiction is heavyweight: a company without a German seat or management is only taxed on German-source income such as a permanent establishment or German dividends.) For a standard foreign-owned GmbH, expect the full ~30% combined burden on global profit, with relief for foreign tax via treaties. Running real operations or staff in another country can create a foreign permanent establishment and split the tax base, which is a question for cross-border advice.
Losses, reliefs and incentives
Trading losses can be carried back one year (within limits) and carried forward indefinitely, though large carried-forward losses are subject to a 'minimum taxation' cap that throttles how much can offset profit in a single year. Germany also offers real incentives a foreign-owned company can use: the Research Allowance (Forschungszulage), expanded in 2025, gives a cash-refundable credit on qualifying R&D wages; and the 2025 'investment booster' temporarily reintroduced declining-balance (degressive) depreciation for movable assets bought in 2025-2027, letting companies deduct 30% of an asset's remaining book value each year to front-load deductions.
Filing calendar
A GmbH/UG files annual corporate income tax (KSt), trade tax (GewSt) and VAT (USt) returns, generally due by 31 July of the following year (extended to end of February of the year after that when filed through a Steuerberater). VAT advance returns are filed monthly or quarterly depending on turnover, with payment due by the 10th of the following month. Annual financial statements must be published in the Bundesanzeiger (the federal gazette). Missing deadlines triggers late-filing surcharges and interest, and persistent non-publication of accounts draws administrative fines.
Frequently asked questions
Is the German corporate tax rate really just 15%?
No — 15% is only the federal Koerperschaftsteuer. Add the 5.5% solidarity surcharge on that tax (taking it to 15.825%) and the municipal trade tax (Gewerbesteuer, typically ~14% and up), and the realistic combined burden is around 30-33%. A reform will cut the 15% federal layer by one point a year from 2028 down to 10% in 2032, easing the combined rate over time.
Will Germany tax my company on income I earn outside Germany?
Yes. A GmbH/UG is incorporated and seated in Germany, so it is German tax-resident and taxed on its worldwide profits, not just German-source income — living abroad does not change that. You may get relief for foreign tax via a treaty or a foreign permanent establishment, but the default base is worldwide. This is one reason Germany is a heavyweight rather than a light-touch jurisdiction.
How much tax is withheld when my German company pays me a dividend abroad?
By default 26.375% — that is 25% Kapitalertragsteuer plus the 5.5% solidarity surcharge. A double-tax treaty usually reduces it (the U.S.-Germany treaty to 5% or 15%), and a qualifying EU corporate parent can reach 0% under the EU Parent-Subsidiary Directive. The relief is not automatic: you claim it via a BZSt exemption certificate or a refund, so plan for it in advance.
Do I have to register for VAT if I have no German customers?
It depends on what and to whom you sell. A business with no German establishment that makes taxable German supplies generally registers from the first supply. But pure B2B services to other businesses are often handled by the reverse charge (the customer self-accounts for VAT), and EU B2C distance sellers can use the One-Stop-Shop above the EUR 10,000 threshold. Confirm your specific supply chain with a Steuerberater.
Sources
- Handelsregister — official German commercial register
- Bundeszentralamt fuer Steuern (BZSt) — Federal Central Tax Office (VAT ID, withholding relief)
- GTAI (Germany Trade & Invest, official) — Corporate Taxation in Germany
- GTAI (official) — Taxation of Dividends
- PwC Tax Summaries — Germany corporate income tax (15% + solidarity + trade tax)
- PwC Tax Summaries — Germany withholding taxes (25% + 5.5% on dividends)
- PwC Tax Summaries — Germany significant developments (2028-2032 rate reduction)
- Bundesfinanzministerium — the growth booster (investment programme, July 2025)
- firma.de — Notary fees & tax for setting up a GmbH in Germany
- Bundesanzeiger — official federal gazette for annual financial statements
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