Germany company legal and accounting and tax services

Since 2003, Healy Consultants Group assists multi-national Clients’ to timely accurately and completely discharge their annual legal & accounting & audit and tax statutory reporting obligations. Our in-house Accounting and Tax Department will i) provide book-keeping support and ii) monthly and quarterly Government reporting including VAT and payroll and iii) prepare annual financial statements and iv) secure an exemption from the annual independent statutory audit and v) legally minimising corporation tax.

Summary of corporate taxes in Germany

1. Depending on the city of domicile, the effective German corporate tax rate typically ranges between 23% and 33% (including the solidarity surcharge and trade tax). Quarterly advance payments are due on 10 March, 10 June, 10 September and 10 December; and
2. Losses may be carried back one year and carried forward indefinitely; and
3. Germany does not levy withholding tax on intra-group loans with a fixed interest rate. Our multi-national Clients’ can deduct interest expense up to 30% of taxable earnings; and
4. All dividends paid to a non-resident shareholder will suffer an effective rate of 26.375% withholding tax, unless reduced by a double tax treaty. No tax is levied on dividends qualifying under the EU parent-subsidiary directive (PSD). The distributing company may apply the exemption under the directive or a reduced withholding tax rate under a treaty only if the recipient obtains a clearance certificate from the tax authorities in advance and presents the certificate before the payment is made; otherwise, a refund may be possible; and
5. The withholding tax on royalties paid to a non-resident corporation or an individual is 15.825%, unless the EU IRD applies, or the rate is reduced under a tax treaty. The payer may apply the exemption under the directive or a reduced withholding tax rate under a treaty only if the recipient obtains a clearance certificate from the tax authorities in advance and presents the certificate before the payment is made; otherwise, a refund may be possible; and
6. The withholding tax rate for remunerations for supervisory board members of German companies is and can be reduced by applicable double taxation treaties or EU directives; and
7. In Germany, VAT of 19% is levied on the provision of the majority of goods and services. Zero-rated supplies are mainly those i) from within the EU and ii) exports to non-EU countries and iii) cross-border transport of goods to and from non-EU countries. If goods are procured from businesses in non-EU countries, an import VAT must be paid for them, which is likewise deducted from the payable VAT; and
8. Capital gains are included in taxable income. Capital gains from the sale of shares held by a corporation are fully exempt. All other capital gains are subject to corporate income tax; and
9. Customs duties are applicable on goods imported from outside the EU. The amount of the duty depends on what product number (TARIC Code) a product is categorised under, and what customs value is assigned to the goods as an assessment basis for the customs duty rate; and
10. Regardless of nationality, all German residents are taxed on their worldwide income. Personal income tax is charged on a sliding scale from 14% to 45%. Non-residents are only required to pay tax on German-sourced income.
11. Payroll tax or wage tax is generally levied by way of withholding. A German employer has to withhold the wage tax from the employee’s gross income. The wage tax is treated as a prepayment to the employee’s income tax liability.
12. All employees must pay approximately 20% of their gross annual salary into social security contributions for i) unemployment insurance and ii) pension insurance and iii) health insurance. Furthermore, the employer must pay social security contributions of approximately another 20%;

Germany corporate legal and compliance considerations

1. For small companies, the financial statements have to be drawn up within six months after the end of the accounting period. For medium-sized and large companies, the equivalent period is 3 months. Small and medium sized companies enjoy an exemption from an independent statutory annual audit; and
2. In general and irrespective of the size of the company, the annual financial statements have to be submitted for publication to the German electronic Federal Gazette (Elektronischer Bundesanzeiger) not later than twelve months following the end of the accounting period; and
3. The German commercial register contains information on our Clients’ company including i) company name and share capital and ii) information about managing directors and iii) the object of the company and the articles of association and iv) shareholders’ list. Commercial registers are centrally accessible through the common register portal of the German federal states;
4. To minimize German withholding tax, it has a wide network of double tax treaties with about 100 countries including i) the USA and ii) all European countries and iii) Australia and iv) Canada and v) China and vi) Japan and vii) the UAE and viii) Singapore and ix) the UK; and
5. Beneficial ownership/ultimate beneficial owners, will have to be annually reported to German Transparency Register (Transparenzregister); and
6. Standard transfer pricing methods accepted under German tax law are the OECD comparable uncontrolled price method, the resale price method and the cost-plus method. Specific transfer pricing rules apply to cross-border intragroup transfers of functions; and
7. An exit tax will be imposed on the “profit potential” that is deemed to be transferred, based on the discounted cash flow value of the subsidiary/branch before and after the restructuring. The tax law allows the taxation of unrealized capital gains when Germany’s right to tax the gains on the sale or use of assets is restricted or excluded as a result of a transaction (e.g., if a taxpayer transfers its tax residence to a foreign country or if an asset is transferred out of Germany);
8. Germany is also part of the United Nations, the OECD, NATO, the G7, G20 and the European Monetary Union (EMU).

Germany company tax filing and payment due dates

Important statutory deadlines include:

Healy Consultants Group fees for accounting and tax support

Average engagement fees for multi-national Clients’ approximate:

Note: * For an active trading company, these accounting, audit and tax fees are an estimate of Healy Consultants Group fees to discharge your annual company accounting and tax obligations. Following receipt of a set of draft accounting numbers from your company, Healy Consultants Group will more accurately advise accounting and tax fees.

Healy Consultants Group’s monthly bookkeeping services fee of €860 includes i) receiving in Dropbox monthly invoices from our Client ii) labelling monthly bank statement transactions iii) preparing and submitting monthly income and expenses statements and iv) monitoring monthly profit levels to minimise annual tax.