🇩🇪 Tax Overview — Germany
Corporate tax, VAT/GST, and key tax information for businesses operating in Germany.
Tax Treatment by Structure
Limited Liability Company (GmbH)
Subject to corporate income tax at 15%, a 5.5% solidarity surcharge on that (effectively 15.825%), and municipal trade tax (Gewerbesteuer) averaging around 14%, bringing the combined effective rate to approximately 30%. VAT at 19% applies to most goods and services. Dividends distributed to individuals are subject to a 25% flat withholding tax plus solidarity surcharge.
Entrepreneurial Company with Limited Liability (UG (haftungsbeschränkt))
Taxed identically to a GmbH: 15% corporate income tax, 5.5% solidarity surcharge, and municipal trade tax, totalling approximately 30%. The mandatory 25% profit retention reduces distributable profits in early years. Once the company has accumulated €25,000 in reserves, it can convert to a GmbH and the retention obligation ceases.
Stock Corporation (AG)
Subject to the same tax regime as a GmbH: approximately 30% combined corporate income tax, solidarity surcharge, and trade tax. Dividend distributions to individual shareholders are subject to a 25% flat withholding tax (Abgeltungssteuer) plus 5.5% solidarity surcharge. The AG may benefit from participation exemptions on dividends received from subsidiaries (95% exemption under certain conditions).
This content is educational and does not constitute legal or tax advice. Always consult a qualified professional for your specific situation. Data last verified March 2026.