Körperschaftsteuer — Basic Structure
All German legal entities (GmbH, AG, UG) are subject to Körperschaftsteuer (KSt) under KStG §23(1) on worldwide income if resident in Germany. The rate is a flat 15% — no progressive brackets.
- KSt: 15% flat rate on taxable income (zu versteuerndes Einkommen)
- Solidaritätszuschlag: 5.5% of KSt liability = 0.825% of income
- Combined federal effective rate: 15.825%
- Gewerbesteuer (trade tax) is separate — adds 14–17% depending on city
- Combined KSt + GewSt: typically 28–33% total
- Advance payments (Vorauszahlungen): quarterly on 10 Mar, 10 Jun, 10 Sep, 10 Dec
Combined Corporate Tax Burden by City
Both Körperschaftsteuer and Gewerbesteuer apply simultaneously. The GewSt component varies by municipality Hebesatz.
| City | KSt + Soli | Gewerbesteuer | Combined Rate |
|---|---|---|---|
| Munich (München) | 15.825% | 17.15% (Hebesatz 490) | 32.975% |
| Frankfurt am Main | 15.825% | 16.10% (Hebesatz 460) | 31.925% |
| Hamburg | 15.825% | 16.45% (Hebesatz 470) | 32.275% |
| Düsseldorf | 15.825% | 15.40% (Hebesatz 440) | 31.225% |
| Berlin | 15.825% | 14.35% (Hebesatz 410) | 30.175% |
| Eschborn (near Frankfurt) | 15.825% | 9.80% (Hebesatz 280) | 25.625% |
§8b KStG Schachtelprivileg — 95% Participation Exemption
Dividends and capital gains from corporate shareholdings ≥10% are 95% exempt from KSt under §8b KStG (the remaining 5% is a deemed non-deductible expense). This makes Germany's holding-company regime highly efficient.
Worked example: A German GmbH receives €1,000,000 dividend from a subsidiary. §8b exempts 95% = €950,000. Only €50,000 is taxable. KSt + Soli on €50,000 = €7,912.50. Effective leakage: 0.79%.
- ≥10% participation required for dividend exemption (§8b(4) Streubesitz threshold)
- Capital gains exempt regardless of holding size (§8b(2))
- 5% add-back applies in all cases under §8b(3) and §8b(5)
- GewSt §9 Nr 2a exemption requires ≥15% participation (different threshold)
Planned KSt Rate Reduction 2028–2032
The Wachstumschancengesetz has announced a scheduled step-down of KSt from 15% to 10% between 2028 and 2032. Subject to legislative confirmation (verify against Bundesgesetzblatt).
| Year | Planned KSt Rate | Combined Federal Rate (KSt + Soli) |
|---|---|---|
| 2026 | 15% | 15.825% |
| 2027 | 15% | 15.825% |
| 2028 | 14% | 14.77% |
| 2029 | 13% | 13.715% |
| 2030 | 12% | 12.66% |
| 2031 | 11% | 11.605% |
| 2032 | 10% | 10.55% |
Organschaft — Tax Group Consolidation (KStG §§14–19)
An Organschaft allows a parent GmbH and subsidiaries to be treated as a single tax unit, enabling same-period intra-group loss offset. Requires a Gewinnabführungsvertrag (PLPA) registered in the Handelsregister for a minimum 5-year term.
- Financial integration only required (parent holds majority voting rights)
- PLPA must run for minimum 5 years — early termination retroactively collapses Organschaft
- Organgesellschaft can be a GmbH, UG, AG, or other corporate entity
- Loss offset is the primary benefit — subsidiaries' losses reduce parent's tax base in same year
§8c KStG — Loss Forfeiture on Share Transfers
A transfer of more than 50% of GmbH shares within 5 years to a single acquirer causes full forfeiture of accumulated loss carry-forwards. The former 25%–50% pro-rata rule was struck down by BVerfG in 2017 and is not current law.
- >50% transfer → full loss forfeiture (current law)
- Saving clause: Konzernklausel — intra-group transfers with same UBO exempt
- Saving clause: Stille-Reserven-Klausel — losses survive up to hidden reserves in assets
- §8d KStG election available: elect business-continuity carry-forward if same business continues
- Mindestbesteuerung (§10d EStG): even without §8c issues, only 70% of profit above €1M can be offset by carry-forwards
Filing Deadlines and ELSTER
Körperschaftsteuererklärung must be filed electronically via ELSTER. Mandatory for all GmbH/AG taxpayers.
- Unrepresented filer deadline: 31 July of year following tax year
- With Steuerberater mandate: extended to 28 February two years after tax year
- Late filing penalty: 0.25% of assessed tax per commenced month
- Finanzamt issues formal Körperschaftsteuerbescheid — object within 1 month if disputed (§347 AO)
Common questions.
What is Germany's corporate tax rate in 2026?
15% Körperschaftsteuer + 5.5% solidarity surcharge = 15.825% combined federal rate. Plus Gewerbesteuer (trade tax) of 14–17% depending on municipality. Combined: typically 28–33%.
Is Germany planning to cut corporate tax?
Yes — the Wachstumschancengesetz announces a KSt step-down from 15% to 10% between 2028 and 2032 (one percentage point per year). This remains subject to legislative confirmation via Bundesgesetzblatt.
What is the §8b KStG Schachtelprivileg?
§8b KStG provides that dividends and capital gains from corporate shareholdings are 95% exempt from Körperschaftsteuer. The remaining 5% is deemed a non-deductible expense (§8b(3)+(5)). For dividends, the shareholding must be ≥10% at the beginning of the calendar year.
What is a verdeckte Gewinnausschüttung (vGA)?
A vGA (hidden profit distribution) arises when a GmbH provides a benefit to its controlling shareholder (e.g. above-market salary, below-market interest on shareholder loans) that an arm's-length third party would not receive. The vGA is added back to taxable income and simultaneously treated as a dividend. Finanzamt examinations consistently scrutinise shareholder-director remuneration in foreign-founded GmbHs.
When are KSt advance payments due?
Four quarterly Vorauszahlungen are due on 10 March, 10 June, 10 September, and 10 December, based on the Finanzamt's assessment of the prior year's liability.
What happens to my GmbH's losses if I sell more than 50% of the shares?
Under KStG §8c, a transfer of >50% of shares within 5 years causes full forfeiture of accumulated loss carry-forwards. Saving clauses include the Konzernklausel (same UBO), Stille-Reserven-Klausel (losses survive up to hidden reserves), and the §8d election (business continuity carry-forward).
Does Germany's Pillar Two (MinBestG) apply to my GmbH?
Only if your MNE group has consolidated revenue ≥€750 million in at least 2 of the prior 4 fiscal years. Most GmbH founders are well below this threshold. If in scope, the MinBestG imposes a top-up tax to reach a 15% global minimum effective rate.
How are GmbH managing director salaries treated for corporate tax?
Managing director salaries (Geschäftsführergehälter) are deductible as Betriebsausgaben from the GmbH's corporate tax base, provided they are at arm's length. Excessive salaries paid to controlling shareholders are reclassified as verdeckte Gewinnausschüttungen (hidden profit distributions) and added back to taxable income. Benchmark market salaries should be documented.
What is the Zinsschranke and when does it apply?
The Zinsschranke (interest barrier) under §4h EStG/§8a KStG limits net interest deductions to 30% of EBITDA (taxable). The rule applies only when net interest expense exceeds €3 million/year — most small GmbHs are unaffected. Above the €3M threshold, undeducted interest carries forward without time limit but is at risk on >50% ownership change under §8c KStG.
Can a GmbH carry tax losses forward or backward?
Loss carry-forward: unlimited period, but restricted to 60% of taxable income above €1 million (Mindestbesteuerung). Loss carry-back: limited to €10 million per year and only to the immediately preceding tax year. Carry-forward is forfeited on a >50% ownership change (§8c KStG) unless a saving clause applies.
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