Page 22 - CEE Tax Guide 2025

Germany

Forvis Mazars GmbH & Co.
KG Wirtschaftsprüfungsgesellschaft
Steuerberatungsgesellschaft
Alt-Moabit 2 | 10557 Berlin |
Deutschland
Phone: +49 30 208 88-1262
www.forvismazars.com/de

Corporate taxes and other direct taxes Partnerships are generally tax transparent, however,
it is possible to opt for an intransparent taxation.
Corporations (capital companies, associations In addition, German municipalities levy trade
and estates) are subject to unlimited corporate tax if the taxpayer (individual or corporation)
income tax liability if either their registered seat conducts in Germany a business through a German
or their effective place of management is located permanent establishment. The tax rates depend
in Germany (so-called tax residents). In this case, on the municipality in which the business
the worldwide income of the corporation is subject is conducted and vary between 7% (minimum tax
to German corporate income tax (taxation on the rate) and 31.5%. In most cases the tax rate is 14%.
basis of universal principle). Non-tax resident Germany levies withholding taxes i. a. on dividends
corporations are taxed with their domestic income and interest (26.375%) and on royalties (15.825%).
(taxation on the basis of the territorial principle). In case of a lower tax treaty rate, the PSD or the IRD,
The corporate income tax rate is 15%. The only under specific conditions the payments may
solidarity surcharge amounts to 5.5% and is levied be made with lower rate, otherwise a reimbursement
additionally on the corporate income tax and not procedure takes place (during between 1.5 –
on the income (i.e. overall tax burden 15.825%).
2 years). Germany has strict anti-avoidance regimes
restricting directive or treaty relief.
Transfer pricing in Germany Germany has a large treaty network, currently
Arm’s length principle Since 1983 double tax conventions with respect
to taxes on income and capital applicable with
Documentation liability Since 2003 94 jurisdictions (as of January 1, 2025).
APA Since 2006
Germany has specific rules in the External Tax
Country-by-Country From FY 2016 Relations Act for foreign income with provisions i. a.
liability on transfer pricing, CFC-taxation and switch-over
Master file-local file From FY 2017 clause for foreign PE-income. Furthermore, Germany
(OECD BEPS 13) introduced in 2021 the Combating Tax Havens
applicable Act implementing all proposed measures of the
Penalty EU. Jurisdictions qualify as non-cooperative tax
jurisdictions, if they are blacklisted by the EU.
lack of documentation Authorities may estimate
tax basis, penalty Germany does not levy a wealth tax, even though the
5—10% of estimated provisions still exist. In politics the reactivation as well
additional income. as the introduction of one-time levy is sometimes

tax shortage Subject to fines discussed, but currently it is not on the table.
and imprisonment Germany levies a gift and inheritance tax with tax
in severe cases. Self-
denunciation possible. rates depending on the kinship and the value of the
transfer (0–50%).
Related parties ≥ 25% Direct / indirect
control, entitlement
of profits or the proceeds VAT and other indirect taxes
of liquidation.
Germany complies with the VAT directive 2006/112/
Safe harbors (revenue-based for EC. Germany has made use of various options
master and local file)
granted by the directive. It is possible to set up a VAT
Level of attention paid 9/10 group between two VAT-tax payers. Specific
by Tax Authority
deliveries and other services are tax exempt.
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