GmbH taxation

GmbH taxes in Germany: five taxes, five calendars, one profit

A German GmbH does not pay one tax. It pays corporate income tax and the solidarity surcharge to the federal tax office, trade tax to its municipality, VAT on its supplies and wage tax on every salary, and it withholds a further tax whenever it distributes a profit. Three of those reduce what the company keeps; VAT and wage tax it only collects and passes on. This page sets out all five, then calculates 100,000 euros of profit through to the shareholder's account.

Last reviewed: 2026-09-20

Corporate income tax and the solidarity surcharge

Corporate income tax is 15 percent of taxable income under § 23 (1) of the Corporate Income Tax Act (Körperschaftsteuergesetz). There is no tax-free amount and no progression: the first euro of profit is taxed like the millionth. On top sits the solidarity surcharge of 5.5 percent of the assessed corporate income tax, which corporations still pay because the threshold that removed it for most private individuals covers assessed income tax only. Together that is a flat 15.825 percent, wherever the company sits.

The rate is already scheduled to fall. From assessment period 2028 § 23 (1) reduces it by one point a year: 14 percent in 2028, 13 in 2029, 12 in 2030, 11 in 2031 and 10 from 2032. That is written law, not a proposal, and trade tax is untouched by it.

Trade tax: the municipality sets the price of your address

Trade tax runs in three steps. The trade profit is the profit determined under income and corporate tax law, increased by the add-backs of § 8 and reduced by the deductions of § 9 of the Trade Tax Act (Gewerbesteuergesetz). That figure is rounded down to full 100 euros and multiplied by the base rate of 3.5 percent, and the municipality applies its multiplier (Hebesatz) under § 16 (1).

Two points catch foreign owners out. The allowance of 24,500 euros exists, but § 11 (1) sentence 3 no. 1 grants it only to individuals and partnerships, so a GmbH is taxed from the first euro. And trade tax does not reduce its own base, because under § 4 (5b) of the Income Tax Act it is not a deductible business expense. A statutory floor of 280 percent also arrives under § 16 (4) sentence 2, first applying to the 2027 collection period.

100,000 euros of profit, calculated through

The same profit in three municipalities, and the difference between leaving the money in the company and taking it home.

Multiplier 400 percent: trade tax 14,000 euros, corporate income tax 15,000 euros, solidarity surcharge 825 euros. The company keeps 70,175 euros, an effective burden of 29.83 percent.
Multiplier 250 percent: 24,575 euros in total, or 24.58 percent. Multiplier 580 percent: 36,125 euros, or 36.13 percent. Between the cheapest and the most expensive address lie 11,550 euros a year on the same profit.
Distribute the remaining 70,175 euros in full to a German-resident private shareholder at a 400 percent multiplier and 25 percent capital yields tax plus surcharge is withheld. About 51,666 euros arrive, a total burden of roughly 48.3 percent.
Retain instead and you carry on working with about 70 percent of the profit rather than about 52 percent. Nothing is saved, only postponed.
Assumptions: no add-backs or deductions, no loss carry-forwards, no church tax and no director's salary. This is a model calculation for orientation, not tax advice.

VAT, wage tax and the director's salary

VAT is 19 percent of the taxable amount under § 12 (1) of the VAT Act (Umsatzsteuergesetz), reduced to 7 percent for the supplies listed in § 12 (2). Input VAT is deducted and the difference remitted by the tenth day after each advance return period under § 18 (1) sentences 1 and 4. The default period is the calendar quarter, and the month applies where the previous year's tax exceeded 9,000 euros.

Wage tax is where owner-managed companies most often go wrong. A managing director on a service contract is an employee for wage tax purposes, even a sole shareholder acting as sole director, so the company withholds at every payment under § 38 (3) sentence 1 of the Income Tax Act and files by the tenth day under § 41a (1) sentence 1. The salary is not a drawing: it reduces the profit and therefore both corporate income tax and trade tax. Its limit is what a careful and conscientious manager would have paid a third party, and anything beyond is a hidden profit distribution.

Dividends and the payment calendar

A resolved distribution is investment income under § 20 (1) no. 1 of the Income Tax Act, subject to deduction at source at 25 percent under § 43a (1) sentence 1 no. 1 plus the solidarity surcharge, remitted by the tenth of the following month under § 44 (1) sentence 5. Prepayments come in two rhythms: corporate income tax on 10 March, 10 June, 10 September and 10 December under § 37 (1) sentence 1 of the Income Tax Act through § 31 (1) sentence 1 of the Corporate Income Tax Act, trade tax on 15 February, 15 May, 15 August and 15 November under § 19 (1) sentence 1 of the Trade Tax Act. They follow the last assessment, which makes a profitable first year comfortable and the second one hard.

How this runs in our software

The chain starts with bookkeeping: documents arrive by upload, by an e-mail inbox or from a bank connection, our AI proposes the account and the tax key, and you confirm. From the trial balance come the HGB annual financial statements, filed with the Company Register, plus the E-Bilanz under § 5b of the Income Tax Act, the corporate income tax return KSt 1 and the trade tax return GewSt 1 A, each validated before anything leaves. The first annual financial statements per workspace are free, the calculation costs nothing, and a direct transmission through the ELSTER portal is charged per return.

Frequently asked questions

What is the total tax rate on GmbH profits in Germany?

At company level, 15 percent corporate income tax plus 5.5 percent solidarity surcharge on that tax, plus trade tax of 3.5 percent base rate times the municipal multiplier. At a multiplier of 400 percent that is 29.83 percent, at 250 percent 24.58 percent and at 580 percent 36.13 percent. Distributing to a private individual takes the combined burden to roughly 48 percent.

Does a GmbH get the 24,500 euro trade tax allowance?

No. § 11 (1) sentence 3 no. 1 of the Trade Tax Act grants it only to individuals and partnerships, so a GmbH is taxed on its trade profit from the first euro. This is one of the few points where a sole trader is genuinely cheaper at small profits.

Is the managing director's salary taxed differently because he owns the company?

No. A director on a service contract is an employee for wage tax purposes, so the company withholds at each payment under § 38 (3) sentence 1 of the Income Tax Act. What changes with a controlling shareholder is the formality: remuneration must be agreed clearly, in advance and effectively, otherwise it is a hidden profit distribution whatever its amount.

Does retaining profits save tax?

It defers rather than saves. Corporate income tax, the surcharge and trade tax arise whether or not you distribute, and only the 25 percent capital yields tax waits until the money accrues to the shareholder.

When do the 2025 returns have to be filed?

31 July 2026 if the company files itself, seven months after the end of the calendar year under § 149 (2) sentence 1 of the Fiscal Code. With a tax adviser engaged the date is the last day of February of the second following year under § 149 (3), and because 28 February 2027 is a Sunday it ends on 1 March 2027.

What changes when the corporate tax rate falls from 2028?

The rate drops one point a year to 10 percent from 2032. On 100,000 euros of profit at a 400 percent multiplier the company-level burden falls from 29,825 euros to 24,550 euros. Trade tax is unchanged, so it becomes the larger half of the bill and the municipal multiplier matters more.

Primary sources and scope

Authoritative references for the key claims on this page. Check the current text before making a filing or accounting decision.