How does corporate tax work for a company in Germany?
A German company pays corporation tax on its taxable profits, plus a solidarity surcharge and trade tax set locally by the municipality. The combined rate therefore varies by location because trade tax differs between municipalities.
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How it works
Taxable profit is calculated from the annual accounts and adjusted under tax rules for items treated differently, such as certain provisions and depreciation. The company files an annual corporate tax return, and trade tax is assessed and collected separately from the corporation tax itself.
Commonly mixed up with
Corporation tax is sometimes assumed to be a single flat national rate. Trade tax adds a further, municipality-specific charge on top of the federal corporation tax and surcharge.
How does corporate tax work for a company in Germany?
| Knowledge, Berlin | Business and finance |
|---|---|
| Short answer | A German company pays corporation tax on its taxable profits, plus a solidarity surcharge and trade tax set locally by the municipality. The combined rate therefore varies by location because trade tax differs between municipalities. |
| How it works | Taxable profit is calculated from the annual accounts and adjusted under tax rules for items treated differently, such as certain provisions and depreciation. The company files an annual corporate tax return, and trade tax is assessed and collected separately from the corporation tax itself. |
| Commonly mixed up with | Corporation tax is sometimes assumed to be a single flat national rate. Trade tax adds a further, municipality-specific charge on top of the federal corporation tax and surcharge. |
| Last reviewed | 2026-08-08 |
Short questions
- What is trade tax?
- A municipal tax on business profit, with a rate set locally.
- Does the rate vary by city?
- Yes, trade tax varies because municipalities set their own multiplier.
- Is a return filed annually?
- Yes, a corporate tax return is filed for each financial year.
- Is there a surcharge on top of corporation tax?
- Yes, a solidarity surcharge applies in addition.
- Where is guidance published?
- The Bundesministerium der Finanzen publishes tax guidance.
Sources
More in this track
- What is the difference between a GmbH and a UG in Germany?
- What is Gewerbeanmeldung and who needs it?
- What is the difference between a German tax ID and a VAT number?
- What social contributions apply when hiring an employee in Germany?
- What is the difference between a Freiberufler and a Gewerbe in Germany?
- What is the Handelsregister and which businesses must join it?
- What is needed to open a German business bank account?
- What decides office and coworking costs in Berlin?
- What must a valid business invoice in Germany contain?
These pages explain how the rules work and link the authority that owns them. They are not legal, tax or immigration advice, and amounts and thresholds change, so open the source before you act.
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