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All Taxes that Entrepreneurs Have to Pay in Germany

In Germany, you pay relatively high taxes compared to other countries. The good news is that the tax system is not as complicated as everyone says. Therefore, it’s possible to save a lot of money if you know about the basic aspects of this topic.

Okay the first step would be of course registering with the tax office. If you have not registered yet, you can read our blog post on this topic or watch our YouTube videos, which we have already prepared for you.

As an entrepreneur, you are self-responsible to pay your taxes. Which tax types are relevant to you and your business depends largely on your chosen legal form. To put it simply, a distinction can be made between 2 cases here:

  1. Taxes for partnerships and sole proprietorships (KG, GbR, OHG)
  2. Taxes for corporations (GmbH, AG, KGaA)
 

Taxes for partnerships & sole proprietorships

  • Einkommensteuer (income tax)

    This tax refers to the amount of income you generate within one year. The nice thing about this is that you can still deduct your business expenses from this income.

  • Umsatzsteuer (VAT)

  • Gewerbesteuer (trade tax)

    Freelancers do not have to pay a trade tax. Specifically, you only have to pay trade tax when the annual profit of your company is greater than 24,500€.

  • Lohnsteuer (the payroll tax)

    If you employ anyone, you must deduct payroll tax from his or her monthly salary.

 

Taxes for corporations

If you’re company is a corporation you also have to pay the trade tax, VAT and the payroll tax.

  • Besides that there is also the Körperschaftssteuer (the corporate tax)

    Corporate tax is more or less the same as income tax, except that it is paid only by corporations.

  • and: the Kapitalertragsteuer (the capital gains tax)

    Capital gains tax also only has to be paid by corporations. This relates to the dividends paid to the shareholders.

blog post cover german taxes

If you want to know more about each type of tax, just check out the All-in-one guide. There we go into detail and show you exactly how much you have to pay per tax type. Also take advantage of the free access to our community and exchange with others who have already made experiences with your suitable legal form.

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