What taxes shall be paid by legal entities in Germany?

Taxes to be paid in Germany: specific features of the fiscal system of the Federal Republic of Germany, mandatory payments to be made by legal entities, extra taxes, cooperation with experts.
Taxes to be paid by an entrepreneur in Germany
The fiscal regulations of the Federal Republic of Germany are clearly structured; however, they seem to be quite complicated due to a huge number of amendments, exceptions and concessions to be granted under some definite conditions. Therefore, it is impossible to fully understand the taxation system of Germany without a specialist`s assistance. Both citizens and non-residents call on specialist`s assistance and support.
Specific aspects of the fiscal system
Taxpayers in the Federal Republic of Germany make significant contributions due to which the economy remains at a high level and all the social programmes are effective.

If you decide to set up a company in Germany, you should be ready to pay taxes as an entrepreneur that amount to 40% - 45% of the income gained, as an average. Moreover, you should bear in mind the following aspects:

· the calendar year is the reporting period;
· percentage taxation shall apply only to the funds received within the country;
· delay in obligatory payments may result in essential penalties and ban on activities;
· the list of tax payments directly depends on the form of incorporation of a legal entity.

Most businessmen expect that they will be charged the progressive tax – it is quite widely-used in Germany. But in fact it applies only to individuals; firms shall make contributions as per the clearly determined rate.
Financial obligations of a legal entity
Large corporation and small companies after registration will receive reminders of the required payments to be made on a monthly basis. This list includes:

· VAT – the general rate is equal to 19%, in some cases you can count on this rate reduction to 7% (payment to be made based on the turnover);
· income tax – this tax shall be paid in the amount of 15% of any income every 3 months in Germany (deductions are valid for equivalents of Russian LLC, JSC and partnerships);
· solidarity supplement – a payment to be made in addition to the income tax that amounts to 5.5% of the total sum;
· business payments.

The latter mentioned type of payments is just another version of the income tax in Germany. It shall be paid once per 3 months and amounts to 10-18% of the income. The amount of deductions depends on the region you are operating in as well as on the community it belongs to.

If a company owner hires employees then he/she will bear obligations to pay employer tax. It is calculated based on the salary and amounts to 14-45% of it. The higher an employee`s salary, the higher is the amount of deductions to be made to the state. It is important to know that the payment shall be made immediately upon money transfer – this can be done once per month or per week.

In case you purchase a real estate unit, you should consider 2 other types of payments:

· for real estate – 3-4% of the transaction amount;
· for property– annually 0.6% of the initial price.

The tax on dividends is set at about 25%. However, firms have an opportunity to reduce it by 45-90%, and if certain conditions are met, it can even be absolutely removed from the general list.
Difficult to figure it out on your own?
If you still have any questions, please contact our experts. They can arrange a free consultation for you and, if necessary, can select and purchase a shelf company – our register of suitable options is updated regularly. We also offer services on offshore companies establishment including those to be rendered remotely.
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