1. Corporate Income Tax (K?rperschaftssteuer)
If you incorporate a German company, you will need to pay corporate income tax, which is based on the German Corporate Income Tax Act (KStG). The basis for taxation is the amount of profit of the company, not the turnover. Corporate income tax is levied at a flat rate of 15% of the taxable income of the company. Taxable income (i.e., annual business profit) constitutes the tax base for corporate income tax.
Under German commercial law, a company's annual profit is calculated and recorded in its annual financial statements. This also forms the basis for determining taxable income. However, German tax law offers different accounting options and income correction rules, which means that taxable income is often different from the annual profit determined in the financial statements under commercial law.
All German companies, including limited liability companies and joint stock companies, as well as all foreign companies with a permanent establishment in Germany, are subject to corporate income tax.
2. Solidarity tax (Solidarit?tszuschlag)
The solidarity tax is a special tax that the German government has subsidized in the former GDR in order to promote solidarity, unity and integration since the merger of East and West Germany and the reunification of Germany in 1990.
The solidarity tax is based on the tax on corporate income tax at a flat rate of 5.5%, i.e. 0.825% of corporate profits (=15% x 5.5%). The taxing party is the same as the corporate income tax.
3. Business tax (Gewerbesteuer)
Business tax is also known as corporate industrial and commercial tax, and its legal basis is the German Business Tax Act (GewStG). The tax is levied on all businesses operating in Germany, regardless of whether the legal form of the business is a partnership or a joint venture. The tax base of the tax is the business income of the enterprise for the year, which is calculated on the basis of the profit according to the Corporate Income Tax Act, as modified by additions and subtractions provided for in the Business Tax Act. The rate of sales tax varies from 7% to 17% throughout Germany.
The rate of sales tax is determined in a special way, the federal government first determines a uniform tax index (Steuermesszahl), which is currently 3.5%, and then each local government determines its own local audit rate (Hebesatz), which is an average of 350%-400%, and may not be lower than 200%. There is no upper limit to the rate set by law, and it usually does not exceed 490% in large cities.
The formula for calculating the business rate is: business income x tax index x tax rate. In recent years, some regions in Germany have reduced the audit rate to reduce the local business tax burden, and as a preferential measure to promote the establishment of new businesses and attract foreign investment.
4. Value-added tax (Umsatzsteuer)
Value-added tax (VAT) is one of the most important taxes in Germany, which is levied in the fields of production, distribution, import and services. VAT is levied on the net price of goods or services and is generally levied at a rate of 19%, with some goods (e.g. foodstuffs, agricultural products, publications, etc.) being taxed at a rate of 7%.
Strictly speaking, VAT is not a tax burden on companies, as the actual bearer of VAT is the final consumer, not the company, so VAT is also known as turnover tax.
Companies are also required to pay VAT on a regular basis when they purchase goods or services. VAT on income and expenses can be offset against each other in the VAT return as input VAT credit (Vorsteuerabzug). For a company, VAT represents only a transient item.
In addition to the main taxes mentioned above, Chinese companies often encounter taxes when investing and operating in Germany, such as real estate tax, property acquisition tax, motor vehicle tax, energy tax and insurance tax.
What are the benefits of registering a German company?
1. The registration of a German company can quickly enhance the brand image of the enterprise, the international legal status is high, protected by the European Union
2. non-German citizens in the registration of a German company, can be free to operate in the territory or abroad, can be in the territory of Hong Kong and outside the bank account
3. use the name of the German company to buy and sell property, international trade, free entry and exit of funds, high credibility 4. High 4. Incorporation of a German company can keep the tax at the lowest level
4. There are very few restrictions on most of the company's business items
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