Features of taxation in Germany

Corporate Tax

Corporate tax is calculated as the difference between the company's income and expenses multiplied by the interest rate (15%). The tax is paid annually at the end of the financial year, unless the company decides to distribute profits as dividends. It should be noted that German companies are required to pay corporate tax regardless of the source of income: in Germany or abroad. In addition, companies additionally pay a trade tax of 14% and a solidarity tax of 5.5%

Value added tax (VAT)

Standard VAT rate in Germany is 19% for transactions within the country. However, in certain areas taxes are paid at a reduced rate of 7%. Such areas, for example, are food, flowers and medicine. It is also worth noting that transactions within the European Union outside Germany are subject to a 0% VAT rate if the partner is a legal entity registered in the European Union and has received a VAT number. Transactions with partners registered in jurisdictions outside the European Union are generally not subject to VAT

Tax on dividends

Since a foreign citizen (individual) may be a founder of a company in Germany, they have the right to receive dividends from the German company. In this situation, the tax rate on dividends is 26.375%. However, if a non-resident confirms permanent residence in Germany, dividends will not be taxed
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