Different tax rates
In Germany, base-rate corporation tax rate is set at 15%. However, there is an additional regional tax, ranging from 14 to 17%, depending on the amount selected by municipalities.
It is possible for companies to carry their losses over to upcoming or previous financial years. German VAT (Umsatzsteuer) stands at 19%, with a 7% rate for food, books and public transportation. On the other hand, exports are not subject to VAT.
Personal income tax is as follows:
|Personal (EUR) income||Tax rate|
|0 – 8004||0%|
|2 441 – 37 400||14%|
|37,401 or more||42%|
|37,401 or more||45%|
|Special taxes||Tax rate|
|Church tax (only in Bavaria and Baden-Württemberg)||9%|
Insurance premiums, school and retirement expenses, living allowances and donations are tax-deductible. A double tax avoidance agreement was implemented between France and Germany in 1959.
Ministry of Finance
The essentials of accounting
German accounting is regulated by Deustches Rechnungslegungs Standards which sets accounting standards. It is published by Deustches Rechnungslegungs Standards Committee. Although the tax year is set from 1st January to 31st December, accounting in Germany is quite free and it is up to the company to choose the format of its accounting documents, as well as their language and currency.
The nature of the documents and the frequency of their publication depend on the size of the company :
- unlimited or partially limited liability companies must keep a balance sheet and a profit and loss account. The publication and auditing of these documents is not compulsory.
- limited liability companies must also keep a balance sheet and a profit and loss account, in addition to an appendix and a management report. These companies must publish their accounts each year and have them checked by an external auditor.