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• Einzelunternehmen (Individual entrepreneurship)
• GmbH (Limited Liability Company)
• Unternehmergesellschaft (haftungsbeschränkt) – UG (Mini-GmbH) (simplified form GmbH)
• Offene Handelsgesellschaft (OHG) – Full trading company
• Kommanditgesellschaft (KG) – Limited partnership
• Zweigniederlassung (Branch of a foreign company)

Taxes for Einzelunternehmen (Individual Business)

Individual entrepreneurship (Einzelunternehmen) in Germany is subject to several types of taxation. Since the enterprise does not have the status of a separate legal entity, all profits are taxed as personal income of the entrepreneur. Below are the main taxes paid by an individual entrepreneur:

1. Personal income tax (Einkommensteuer)

• Bid: progressive – from 0% to 45% depending on the amount of profit.
• Additionally: for incomes over 277,826 euros (for singles) is applied “rich tax” – an additional tax of 3% (that is, the total rate is up to 48%).
• Taxable: the entrepreneur’s net profit after all allowed expenses.
• Reporting form: annual declaration (Einkommensteuererklärung).

2. Trade tax (Gewerbesteuer)

• Mandatory: for Einzelunternehmen which are registered as commercial enterprise (Gewerbebetrieb).
• Bid: a base rate of 3.5%, which is multiplied by a coefficient (Hebesatz) set by the local authority (usually 200%–900%).
• Privilege: the first 24,500 euros of profit is exempt from this tax.
• Partially calculated from personal income tax to avoid double taxation.

3. Value added tax (Umsatzsteuer / Mehrwertsteuer)

• Bid:
  • standard – 19%
  • reduced – 7% (for certain goods/services)
• Entrepreneurs with turnover <22,000 EUR/year can use “small business regime” (Kleinunternehmerregelung) – exemption from paying and issuing VAT.
• Declarations: monthly or quarterly reports to the tax office.

4. Contributions to social insurance

(Not taxes in the literal sense, but mandatory for most entrepreneurs)

• Medical insurance (Krankenversicherung): mandatory, private or public.
• Pension insurance (Rentenversicherung): mandatory for some professions (for example, craftsmen, teachers).
• Other contributions: accident insurance, care insurance.

Visnovok:

An individual entrepreneur in Germany pays income tax, sales tax (if applicable), VAT, and also makes social contributions. With proper planning and competent accounting, you can optimize your tax burden and legally take advantage of numerous benefits and deductions.

Taxes for Gesellschaft mit beschränkter Haftung (GmbH) – Limited Liability Company

Limited Liability Company (GmbH) is one of the most popular forms of companies in Germany an independent legal entity, and therefore is taxed separately from its owners. GmbH pays a number of basic taxes related to profit, turnover and other financial aspects.

Here basic taxes, which the GmbH is obliged to pay in Germany:

1. Corporate tax (Körperschaftsteuer)

• Bid: 15% of taxable profit
• Additionally: 5,5% additional solidarity fee (Solidaritätszuschlag) from the amount of corporate tax → effective rate ≈ 15,825%
• Applies to: of the company’s net profit, after all expenses

2. Trade tax (Gewerbesteuer)

• Bid: basic – 3.5%, multiplied by local coefficient (Hebesatz), which defines the municipality
• Effective rate: usually from 7% to 17%, depending on the region (for example, in Berlin – ~14.35%)
• Not subject to deduction from corporate tax, as in the case of individuals

3. Tax on dividends (Kapitalertragsteuer)

• Bid: 25% + 5.5% of the solidarity fee → effective 26,375%
• Applies to: when paying dividends to founders/owners
• Note: if the owner is a legal entity in Germany or the EU, benefits or exemptions may apply

4. Value added tax (Umsatzsteuer / Mehrwertsteuer)

• Bid:
  • standard – 19%
  • reduced – 7% (for certain goods/services)
• GmbH is required to register as a VAT payer, submit monthly or quarterly returns and issue invoices including VAT.

5. Contributions to social insurance (for employees)

GmbH as an employer pays part of the social security contributions for its employees:

• Pension insurance (Rentenversicherung)
• Health insurance (Krankenversicherung)
• Unemployment insurance
• Care and accident insurance

Note: the director (Geschäftsführer), if employed, is also subject to these contributions, but in the case of a sole proprietorship GmbH, this may vary.

Visnovok:

GmbH in Germany pays:

• 15,825% corporate tax,
• 7–17% trade tax,
• 19% (or 7%) VAT,
• 26,375% tax on dividends,
• as well as contributions to social insurance for their employees.

This structure is suitable for medium and large businesses that are aspiring limit personal liability, mother transparent tax system and enhanced opportunities for optimization taxes at the company level.

Fees for Unternehmergesellschaft (haftungsbeschränkt) – UG (Mini-GmbH)

Entrepreneurial company (limited liability) – UG (mini-GmbH) is a simplified version of a GmbH, created specifically for small businesses with minimal start-up capital (from 1 euro). Despite this simplified form, UG is taxed as a full-fledged company, i.e. the same as GmbH.

Here are the main ones taxes and mandatory payments, which must be paid by UG in Germany:

1. Corporate tax (Körperschaftsteuer)

• Bid: 15%
• Additionally: 5,5% solidarity levy (Solidaritätszuschlag) → effective rate: 15.825%
• Taxable: net profit of the company

2. Trade tax (Gewerbesteuer)

• Base rate: 3,5%
• Multiply by a factor (Hebesatz): set by local authorities (usually 200%–900%)
• Effective rate: on average 7–17%
• It is taken into account separately: unlike individuals, UG cannot partially deduct this tax from the corporate tax

3. Tax on dividends (Kapitalertragsteuer)

• Bid: 25% + 5.5% of the solidarity fee → 26,375%
• Applies to: to the payment of profits to the founders
• Possible benefits: for corporate investors from the EU (according to the EU directive or tax agreements)

4. VAT – Value Added Tax (Umsatzsteuer)

• Bid:
  • standard – 19%
  • reduced – 7% (for some services/goods)
• Mandatory VAT registration, if the turnover exceeds 22,000 euros/year
• Reporting: monthly, quarterly or annually

5. Contributions to social insurance (if UG has employees)

• Health, pension, unemployment, care and accident insurance
• UG as an employer pays approximately 20-22% of wages in contributions

Note: if the UG has only one founder and he is also a director, then social contributions may be optional, depending on the status (for example, in the case of full control of the company).

6. Mandatory profit retention

• UG obliged accumulate a reserve fund: at least 25% of net profit every year
• This continues until the company reaches capital 25,000 euros, after which it can be turned into a full-fledged one GmbH

Visnovok:

UG (Mini-GmbH) in Germany pays the following taxes:

• Corporate tax – 15,825%
• Trade tax – 7–17%
• Tax on dividends – 26,375%
• VAT – 19% or 7%
• Social contributions – if there are employees
• Mandatory formation of reserves

This makes UG an attractive form for small businesses and startups who want to limit personal liability and start operations with minimal expenses, while being ready to comply with full tax reporting.

Taxes for Offene Handelsgesellschaft (OHG) – Full trading company

General partnership (OHG) – this general trading company, which is considered a classic partnership form of business in Germany. OHG is not a separate legal entity, but has legal personality, can conclude contracts, be a party in court, own property, etc. The main feature is personal, unlimited liability of all partners for the company’s obligations.

OHG’s tax liability consists of taxation at the enterprise level and at the level of each partner:

1. Income tax of partners (Einkommensteuer)

• OHG does not pay income tax itself, but distributes the profit between the partners
• Each partner includes his share of profit in personal tax declaration (Einkommensteuererklärung)
• Tax rate: progressive – from 0% to 45%
• + solidarity levy (Solidaritätszuschlag): 5.5% of the amount of income tax

2. Trade tax (Gewerbesteuer)

• OHG as an enterprise is obliged to pay this tax
• Bid: basic 3.5%, multiplied by local coefficient (Hebesatz) → usually 7%–17%
• Privilege: each partner can deduct part of the sales tax paid when calculating your income tax (up to a certain limit)

3. Value added tax (Umsatzsteuer / Mehrwertsteuer)

• Bid:
  • standard – 19%
  • reduced – 7% (for certain goods/services)
• OHG must be registered as a VAT payer and submit regular returns

4. Contributions to social insurance

• OHG does not pay social contributions for its partners, as they are not considered employees
• OHG employees: if the company has employees, it is obliged to pay social contributions (as a regular employer)

5. Other possible taxes:

• Property tax (Grundsteuer): if OHG owns the property
• Car tax (Kfz-Steuer): if commercial vehicles are used

Visnovok:

OHG in Germany pays:

• Trade tax – at the enterprise level
• VAT – when making sales
• Income tax (Einkommensteuer) – they pay partners personally, in proportion to their share of the profit
• Social contributions – only for employees

This form of business is suitable for companies with several partners who ready to take personal responsibility for activity and at the same time strive flexibility in profit management.

Taxes for Kommanditgesellschaft (KG) – Limited partnership

Limited partnership (KG) – this limited partnership in Germany, which consists of two types of partners:

• Complementary – carries full personal responsibility;
• Kommanditist – answers only within the limits of their contribution.

Like OHG, KG is not an income tax payer, but taxed as “transparent” structure, where taxes are paid by the members personally, depending on the profit share.

1. Income tax of partners (Einkommensteuer / Körperschaftsteuer)

• KG as a legal form does not pay income tax.
• Partners are natural persons (both general partners and limited partners) pay income tax (Einkommensteuer):
  • Bid: progressive – from 0% to 45% + 5.5% solidarity fee
• Partners are legal entities (for example, if the GmbH acts as a complementary person) are paid corporate tax (Körperschaftsteuer):
  • 15% + 5.5% of the solidarity fee → effectively 15.825%

2. Trade tax (Gewerbesteuer)

• KG as a company pays Gewersteuer:
  • Base rate: 3,5% × local coefficient (Hebesatz) (200–900%)
  • Effective rate: usually 7%–17%
• Natural persons-partners they can partially deduct sales tax from income tax

3. VAT – Value Added Tax (Umsatzsteuer / Mehrwertsteuer)

• KG is required to register as a VAT payer
• Bets:
  • standard – 19%
  • reduced – 7% (for some services/goods)
• Declarations submitted monthly, quarterly or annually (depending on turnover)

4. Social insurance

• Complementary persons (if natural persons): are considered self-employed – usually not obliged pay contributions but may volunteer in the pension system.
• Limited partners: as passive investors – are not subject to social insurance.
• Employees: KG is obliged to pay standard social contributions (medical, pension, unemployment and care insurance).

5. Other taxes (if necessary)

• Property tax (Grundsteuer): if the partnership owns the land
• Car tax (Kfz-Steuer): if using vehicles

Visnovok:

KG in Germany pays:

KG level	Tax	Who pays	Bid
Enterprise	Gewersteuer (trade tax)	KG	7%–17%
Enterprise	Sales tax (ПДВ)	KG	19% / 7%
Partners	Income tax / corporate tax	Phys. or legal persons-partners	0–45% / 15,825%

KG is a convenient form for a family or investment business with a clear separation between active managers and passive investors. She allows distribute profits flexibly and optimize taxation.

Taxes for Zweigniederlassung (Branch of a foreign company)

Zweigniederlassung (branch of a foreign company) in Germany it is a separate structural unit of the main company, which carries out economic activity on the territory of Germany, but is not a separate legal entity. However, such a branch has its own accounting, can act as a party to contracts, open accounts and is subject to German taxation just like German companies.

Below are the main taxes you must pay a branch of a foreign company in Germany:

1. Corporate tax (Körperschaftsteuer)

• Bid: 15%
• Additionally: 5,5% solidarity levy (Solidaritätszuschlag)
• Effective rate: about 15,825%
• Taxable: net profit, received by a branch in Germany
• Note: if the parent company is a legal entity from a foreign jurisdiction, its branch in Germany pays taxes only from profits related to German activities

2. Trade tax (Gewerbesteuer)

• Bid: basic – 3.5%, multiplied by local coefficient (Hebesatz) → effective rate: 7%–17%
• Taxable: profit received by the branch
• Not subject to deduction: as in the case of GmbH

3. Value added tax (Umsatzsteuer / Mehrwertsteuer)

• Bid:
  • standard – 19%
  • reduced – 7% (for some goods and services)
• The branch must be registered as a VAT payer and submit declarations
• A tax payer there is exactly a branch, regardless of where the main company is located

4. Tax on dividends (Kapitalertragsteuer)

• Applies only if the branch pays profits in the form of dividends
• Because a branch is not legally a separate company, she usually does not pay dividends, and transfers the profit to the head office — this can be interpreted as “hidden profit sharing” and be taxed
• Income repatriation tax: may be applied depending on the tax treaty between Germany and the country of incorporation of the parent company

5. Social contributions (if there are employees)

There is a branch the employer and should:

• register in the social insurance system
• pay contributions to:
  • health insurance (Krankenversicherung)
  • pension insurance (Rentenversicherung)
  • unemployment insurance
  • care and accident insurance

6. Other possible taxes

• Property tax (Grundsteuer): if the branch owns real estate in Germany
• Car tax (Kfz-Steuer): in case of using transport

Visnovok:

Zweigniederlassung (branch of a foreign company) in Germany pays:

Tax	Bid	Who pays
Corporate tax	15% + 5.5% solidarity fee	Affiliate
Trade tax	7%–17%	Affiliate
Sales tax (ПДВ)	19% / 7%	Affiliate
Social contributions	~20–22% of salary	Branch (as an employer)
Repatriation of profits is possible	depends on the tax treaty	Main company (indirectly)

Advice: When opening a branch in Germany, international regulations should be taken into account conventions on the avoidance of double taxation — they often regulate the taxation of profits transferred from the branch to the parent company. You can order legal advice on company registration in Germany on this page.