Like in most industrialized countries, the German tax regime for business companies is a sophisticated matter and subject to frequent legislative changes making it challenging to keep up with the latest developments and the appropriate corporate structuring. Particularly inbound investors establishing a subsidiary in Germany or opening a new branch, permanent establishment or representative office usually face complex tax issues which quite often differ from those in their home countries.
German tax law for businesses breaks up into two main categories:
- the income taxation of individual entrepreneurs and partnerships on the one side and
- the corporate income taxation of corporations on the other.
In addition to the regular income taxation the so called business profit tax applies to most business operations. This is a local tax and its tax rate varies from municipality to municipality which is a very important information for international investors because relocating the place of business of a German company to a low tax region can indeed save the company a substantial amount of money.
Finally, like in all European countries, business companies in Germany selling goods and rendering services are, with certain exceptions, subject to value added tax (VAT) which is the equivalent of the sales tax known in other countries like the U.S.
We are entrepreneurs ourselves and know how tedious it can be to comply with all local rules and regulations as a cross-border company in order to be compliant and to meet the requirements of the German tax and social security authorities. A business and tax lawyer will assume as many of your tax duties as possible, in particular the ongoing financial accounting and payroll accounting work, to give you the chance to focus on your core business.
However, this is not the only option. Large companies regularly maintain an in-house tax department. So if you want to avoid outsourcing and want to establish efficient internal accounting services, just let us know and we will be happy to train your staff accordingly. As your external corporate tax consultant, we will only assist you with those tax and accounting services that you cannot or do not want to do yourself.
Learn more about German income and corporate income taxation:
We are proud authors of the German chapters of the renowned LexisNexis Matthew Bender publication “Foreign Tax and Trade Briefs”, which covers the latest tax information for 128 countries including Germany. You can order your copy on www.lexisnexis.com.
Among others, our tax consulting for businesses covers the following services:
- Financial and tax accounting (e.g. booking of current business transactions, open item lists, customer and vendor accounts, business reports, trial balance, financial statements, profit and loss accounting, business assessments, etc.)
- Payroll accounting (e.g. payroll services, transmitting monthly calculations of wage payments, etc.)
- Convenient online communication powered by the German leading tax and accounting software provider DATEV regarding the uploading of bills and receipts which allows you to keep your documents in-house (no back and forth shipping of bills/receipts)
- Annual financial statements and reports
- Complying with all mandatory disclosure requirements (Federal Gazette)
- Preparing and filing the required tax returns (in particular corporate tax, local business profit tax, income tax, and VAT returns)
- Ongoing national and international tax planning services including all issues related to double taxation treaties
- Optimizing corporate and M&A transactions in terms of taxation (acquisitions, restructuring, transformations, etc.) including tax due diligences
- Reviewing and optimizing contracts from a tax perspective
- Intercompany contracts, transfer pricing and associated documentation requirements for cross-border transactions, international reporting (German standards, US-GAAP, IFRS, etc.)
- Customs law and business criminal (tax) law
- Representation before the tax office and litigation before all German tax courts
Investors and international business companies typically do not only face tax issues but also considerable compliance issues if they enter the German market. And, indeed, we do more than just taxes: As your one-shop-stop solution we will be happy to assist you and your business in all legal and compliance matters as well.
Tax accounting which includes drafting of all required tax returns and the annual financial statements is oftentimes charged pursuant to the German Tax Consultants' Fee Ordinance. The exact statutory fees mainly depend on the individual business company's operating figures (as stated in the balance sheet and/or the profit and loss statement). In appropriate cases we also charge our services on an hourly rate basis or we agree on fixed fees with you.
Additional legal work and tax advisory will generally be charged on an hourly rate or fixed-fee basis. After all, we can offer you our specialization in the tax consulting of businesses at reasonable and competitive rates. If you want us to give you a quote taking your individual circumstances into account, please do not hesitate to contact us.
Do you have questions concerning German business tax law or do you experience issues with your German tax accounting? We have assisted a large number of inbound HNWI investors as well as corporate clients from all over the world doing business in Germany and are here to help.
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