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Summary on tax obligations of a new corporation

1. application with financial authority and trade office

Right after the registration within the companies register the new company has to apply for a tax number with the appropriate finance authority. If asked for the company would also receive a VAT-Number.

Basically all companies has to register with the trade office as well.

2. Company Taxes 

The new company has regularly to inform the finance authority about its taxes and if applicable transfer the taxes. You diligently have to take care on your tax issues because a breach of these duties are pursued as a criminal office!

A company could transfer the following taxes:

  • Value Added Tax (VAT) – basically 19 %, except for groceries or newspapers
  • Corporate Tax – 15 % of annual profits
  • Solidarity tax – 5,5 % of the Corporate Tax
  • Commercial Tax – depends on two factors: for one thing from the annual profits as well, for another thing on the local tax factor on the city where the company is registered. (Eg. Munich’s tax factor is about 490 %, Frankfurt/Main’s tax factor is about 460 %, Berlin’s tax factor is about 410 %) On average it is to say the commercial tax might be about 17 %

 

3. Annual obligations

Corporations are obliged on to doing balancing and accounting. Particularly every corporation has to cover an annual financial statement as well as prepare and file an annual tax declaration.

Besides a corporation has to regularly file a turnover tax advance return. To cover all tax issues we recommend on hiring a tax consultant. Please contact us on further questions.