Page 20 - Mazars Central and Eastern European tax guide 2023

Germany can be claimed by the domestic company from the tax Personal income tax / Social security system
authority. Goods imported into Germany from a non-
EU country are subject to an "import VAT" on entry. Sales Individuals are subject to unlimited income tax liability
if they have their residence or habitual abode in Germany.
of goods within the EU in the B2B sector are tax free Nationality is irrelevant for German income tax liability.
(intra-community supply). Sale of goods to a private
Mazars GmbH & Co. KG person is generally subject to German VAT. In addition In this case, the worldwide income of the individual
is subject to German income tax. Individuals who are not
Wirtschaftsprüfungsgesellschaft to VAT, there are various excise duties on imported goods, subject to unlimited income tax liability in Germany, but
Steuerberatungsgesellschaft as well as real estate transfer tax. which receive income from German sources, are subject
Alt-Moabit 2 | 10557 Berlin | to limited income tax liability on these sources.
Deutschland VAT options in
Phone: +49 30 208 88-1878 Applicable / limits Individuals can earn the following types of income
Fax: +49 30 208 88-1999 Germany in Germany: Income from business operations, income
www.mazars.de As of 1 July 2021, OSS from self-employed or employed work, income from
Distance selling
system is applicable. capital assets, income from agriculture and forestry,
income from renting and leasing, and other income.
Call-off stock No In Germany, individuals are subject to a progressive
Corporate taxes and other direct taxes income tax burden amounts to a maximum of 15.825%. VAT group registration No income tax rate of 14% to 45%. A solidarity surcharge
In addition, German municipalities levy trade tax if the Cash accounting – yearly of 5.5% is levied in addition to income tax. A basic
Corporations are subject to unlimited corporate income company has a domestic permanent establishment. amount in EUR (approx.) EUR 600,000/year allowance of EUR 10,908 (2023) to secure the minimum
tax liability if they have either their registered seat or their The average trade tax burden is 14.105% (2021). subsistence level is exempt from German income tax.
effective place of management in Germany. In this case, The determination of taxable income is generally based Import VAT deferment No In principle, taxable income is calculated as the surplus
the worldwide income of the corporation is subject on the result of the income statement under commercial Construction work, emission of income over income-related expenses, or of operating
to German corporate income tax. Corporations that are law. However, taxable income often differs from the permits, gold, cleaning of buildings, income over operating expenses. Personal expenses can
not subject to unlimited corporate income tax liability profit and loss reported in the commercial balance sheet. Local reverse charge turnover covered by the Real Estate also be deducted under certain conditions. Investment
Transfer Tax Act, natural gas and
in Germany, but which receive income from German German tax law provides tax exemptions for certain electricity. income, e.g., interest and dividends, is generally subject
sources are subject to limited corporate income tax liability income, e.g., dividends and capital gains are generally 95% to a separate tax rate of 25%, plus 5.5% solidarity
on these sources. The corporate income tax rate is 15%. exempt from German corporate income tax (minimum Option for taxation surcharge.
The solidarity surcharge amounts up to 5.5% and is levied holding ≥ 10%) and trade tax (minimum holding > 15%). letting of real estate ü
additionally on corporate income tax. The total corporate Income from employment falls within the scope of the
The tax losses for a fiscal year can be offset against the supply of used real estate ü German social security system. This system is divided
profits of the previous year up to an amount of EUR VAT registration
Transfer pricing in Germany 10 million (loss carryback; EUR 1 million from 2024). threshold EUR 22,000/year into unemployment, pension, health, nursing and
accident insurance. Social security contributions are
Any loss exceeding this amount can be carried forward
Arm's length principle ü Since 1983 indefinitely and offset in the following fiscal years (loss usually paid half and half by the employer and the
Documentation liability ü Since 2003 carryforward). In subsequent years, the remaining losses Real estate transfer tax is levied on the selling price employee. The statutory minimum amount for health
or other disposal value of land and or buildings whenever
insurance is 14.6% and is divided equally. The contribution
APA ü Since 2006 can be deducted without limitation up to an amount there is a change of ownership. The base rate of the real for pension insurance is 18.6% and is borne equally
Country-by-Country From FY 2016 of EUR 1 million. In addition, a loss offset of up to 60% estate transfer tax is 3.5%. Each federal state additionally by the employer and the employee. The sum of social
liability ü of the total amount of income exceeding EUR 1 million levies an individual assessment rate. contributions averages 40.8% (excl. accident insurance)
Master file-local file is possible. of an employee's gross salary.
(OECD BEPS 13) ü From FY 2017 Partnerships are not subject to either income or corporate
applicable income tax at the company level, but may be subject Average wage
Penalty to trade tax. The profit of a partnership is subject Wage related taxes in Germany Minimum wage in private sector
Violation of duty to either income tax or corporate income tax at the level
to cooperate: Reversal of the partners. in EUR in EUR
of burden of proof, Germany has concluded Double Taxation Treaties with
authorities may estimate 136 countries. A withholding tax rate of 25% (15% 2,080 4,045
tax basis. Failure to submit: if the recipient is a corporation) applies to dividends. Total wage cost 4,863
lack of documentation ü Penalty 5%-10% of the 2,501 120.23% 120.23%
add. amount of income Interest income is subject to a withholding tax of 25%. Employer´s and other contributions* 421 20.23% 818 20.23%
based on the authorities’ A withholding tax of 15% (30% under certain conditions)
estimate (min. TEUR 5). is levied on royalty payments and other special types Gross salary 2,080 100.00% 4,045 100.00%
Late submission: EUR 100 of income. The withholding tax rates may be reduced under Employees' contributions** 259 12.48% 505 12.48%
p.d. (max. EUR 1 mil.). the applicable Treaty, the EU Parent-Subsidiary Directive Healthcare insurance 168 8.10% 328 8.11%
Up to EUR 50,000 tax or the EU Interest and Royalties Directive.
reduction – fine. Personal income tax and solidarity surcharge*** 142 6.81% 600 14.83%
From EUR 100,000 –
tax shortage ü imprisonment or/and VAT and other indirect taxes Net salary 1,511 72.62% 2,611 64.57%
high fine. Interest on the The VAT rate in Germany is 19%. A reduced rate of 7% * Includes unemployment, pension, healthcare, nursing insurance.
additional tax. ** Includes unemployment, pension, nursing insurance.
Direct or indirect applies to certain basic foodstuffs, books, newspapers, *** Calculation without church tax/for a single 30 year old and without children.
control, or entitlement antiques, livestock, hotel accommodation, railway
Related parties 25% ≤
of profits or the proceeds transport services and some other items. Banking services Dr. Christian Birkholz
of liquidation. and insurance premiums are generally exempt from VAT. Attorney, Tax Advisor
Safe harbours No – If goods are supplied from the EU to non-EU countries, the Partner
Level of attention paid by Tax supply is generally not subject to German VAT (export). Phone: +49 30 208 88-1880
Authority 9/10 Nevertheless, the input tax associated with the goods E-mail: christian.birkholz@mazars.de

20 Mazars Central and Eastern European tax guide 2023 Central and Eastern European tax guide 2023 Mazars 21