A German company pays corporate income tax at 15 percent, a 5.5 percent solidarity surcharge on that tax, and municipal trade tax whose rate depends on where it operates. The corporate rate falls by one point a year from 2028 to 10 percent from 2032. VAT is 19 percent standard and 7 percent reduced, and domestic B2B invoicing is moving to structured e-invoices, with transitional relief for issuers ending after 2026 or, for smaller businesses, after 2027. Corporations above the small-company limits need a statutory audit, and all must publish accounts through the company register.
Corporate income tax, solidarity surcharge and trade tax
Corporate income tax is 15 percent for assessment periods up to 2027 and is legislated to fall to 14, 13, 12 and 11 percent in 2028 to 2031 and to 10 percent from 2032. A solidarity surcharge of 5.5 percent is charged on the assessed corporate tax, so the federal charge is currently 15.825 percent of taxable income.
Trade tax is charged on top. The tax office applies a base rate of 3.5 percent to trade income, and the municipality multiplies the result by its own multiplier. The current statutory default where a municipality sets no higher rate is 280 percent, and the 2025 national average was 410 percent. At that average, trade tax equals 14.35 percent of trade income (3.5 percent x 410 percent), which is why location matters. Corporations do not get the EUR 24,500 trade tax allowance that individuals and partnerships receive.123456
VAT and the B2B e-invoicing phase-in
The standard VAT rate is 19 percent and the reduced rate for listed supplies is 7 percent. Businesses trading within the EU need a VAT identification number, which is issued under section 27a of the VAT Act.
For supplies between two businesses established in Germany, invoices must be structured e-invoices that meet the European standard; a PDF or paper invoice is an 'other invoice'. Every business has had to be able to receive e-invoices since 1 January 2025, and administrative guidance confirms there is no transition for receipt and that formats such as XRechnung and ZUGFeRD (from version 2.0.1, excluding the MINIMUM and BASIC-WL profiles) qualify. Invoices up to EUR 250 and travel tickets are exempt.
For issuing, other invoices remain allowed for supplies made in 2025 and 2026. For supplies made in 2027 they remain allowed only for businesses whose previous-year total turnover did not exceed EUR 800,000, or for invoices sent by EDI. From 2028 all domestic B2B invoices in scope must be e-invoices.7891011
Pillar Two and transfer pricing
German entities of groups with consolidated revenue of EUR 750 million or more in at least two of the four preceding years are subject to the minimum tax, regardless of tax treaties. The act applies to financial years beginning after 30 December 2023, and the undertaxed profits rule to financial years beginning after 30 December 2024, subject to an exception for some EU-parented groups.
Transactions with related parties must be documented, including a transaction overview and the basis for arm's-length pricing. A group-wide master file is required only where the German company's previous-year revenue was EUR 100 million or more.121314
Accounting, audit and publication
Corporations are classed as small, medium-sized or large by reference to balance sheet total, revenue and average employees, using a two-of-three test. A company is small if it stays within two of EUR 7.5 million, EUR 15 million and 50 employees. Medium-sized and large corporations must have their annual accounts and management report audited.
All corporations must transmit their annual accounts electronically to the company register (Unternehmensregister) within one year of the balance sheet date. Trade tax returns are filed electronically, and a state service description gives 31 July of the following year as the deadline where no tax adviser is involved.15161718
| Item | Rule |
|---|---|
| Corporate income tax | 15% to 2027; 14% (2028), 13% (2029), 12% (2030), 11% (2031), 10% from 2032 |
| Solidarity surcharge | 5.5% of assessed corporate income tax |
| Trade tax | 3.5% base rate x municipal multiplier; statutory default 280% where no higher rate is set; 2025 average 410% |
| VAT | 19% standard; 7% reduced for listed supplies |
| E-invoice receipt (domestic B2B) | Required from 1 January 2025, no transition |
| E-invoice issue (domestic B2B) | Other invoices allowed for supplies in 2025-2026; in 2027 only if prior-year turnover was EUR 800,000 or less, or by EDI; mandatory from 2028 |
| Pillar Two | Groups with EUR 750m+ revenue in 2 of 4 prior years; financial years beginning after 30 December 2023 |
| Statutory audit | Required unless small (within two of EUR 7.5m assets, EUR 15m revenue, 50 employees) |
| Transfer pricing master file | Required if prior-year revenue was EUR 100m or more |
| Publication of accounts | Within one year of the balance sheet date, via the company register |
How it works, step by step
- Obtain a VAT identification number if the business will trade with other EU member states8Federal tax administration
- Set up an inbound channel able to receive and process structured e-invoices910Company (no filing)
- File the annual trade tax return electronically; the municipality then applies its multiplier185Tax office and municipality
- Have the annual accounts audited if the company is medium-sized or large1516Statutory auditor
- Transmit the annual accounts to the company register within one year of the balance sheet date17Unternehmensregister
No timings or fees are shown unless an official source states them.
Documents usually needed
- Annual financial statements and, for medium-sized and large corporations, management report and audit report
- Transfer pricing records (transaction overview, transaction documentation and, where revenue is EUR 100m or more, master file)
- Trade tax return filed electronically
- Structured e-invoices (XRechnung, ZUGFeRD 2.0.1 or later, or another EN 16931-compliant format)
- Pillar Two information for in-scope groups
Common mistakes
- Budgeting on the 15 percent headline rate and leaving out the solidarity surcharge and municipal trade tax.
- Assuming one national trade tax rate; multipliers vary by municipality and the 2025 average was 410 percent.
- Treating a PDF as an e-invoice. Only a structured format meeting the European standard counts, and administrative guidance says an invoice that should have been an e-invoice does not support input VAT deduction until corrected.
- Missing the twelve-month deadline to publish annual accounts.
- Overlooking that German entities of large groups are directly subject to the minimum tax, whatever the parent jurisdiction's rules.
When the business crosses borders
- The domestic e-invoice obligation applies where supplier and customer are both established in Germany; invoices to foreign customers fall outside it.
- The minimum tax applies to German entities of in-scope groups regardless of tax treaties.
- Related-party transactions with foreign group companies require transfer pricing documentation under the Fiscal Code.
- Withholding tax on dividends, interest and royalties paid abroad, and treaty relief, must be checked separately; it was not confirmed.
Questions businesses ask
What is the combined tax rate on company profits?
Corporate income tax of 15 percent plus the 5.5 percent solidarity surcharge gives 15.825 percent. Trade tax is added at 3.5 percent multiplied by the municipal multiplier; at the 2025 average of 410 percent that is 14.35 percent of trade income. The trade income base differs from taxable income, so the total is an approximation.1346
What this guide does not yet confirm
These points need checking with a qualified local professional in Germany before you rely on them.
- Withholding tax rates on dividends, interest, royalties and services, refund procedures and the treaty network were not confirmed; the Income Tax Act pages could not be reached in the research window.
- The first assessment period to which the 280 percent default trade tax multiplier applies was not confirmed (the application rule in § 36 GewStG could not yet be checked); earlier law used 200 percent.
- Tax registration with the tax office, VAT return frequency and deadlines, and branch profit taxation were not reviewed.
- Later Federal Ministry of Finance guidance updating the October 2024 e-invoicing circular was not reviewed, because the ministry's site blocks automated access.
- Micro-company relief, trade tax add-backs and the planned e-invoice reporting system were not reviewed.
Sources and review status
Each statement is numbered to the source it was checked against. We use official sources where we can, and each statement says whether it was checked against an official or a secondary source. Sources last checked on 18 October 2026. None of it has been professionally reviewed yet: it is research checked against official and secondary sources by WONE Global, not legal or tax advice.
Corporate income tax is 15 percent of taxable income for assessment periods up to and including 2027. Corporations subject to Körperschaftsteuer; solidarity surcharge and trade tax are charged in addition.
The corporate income tax rate falls to 14 percent for 2028, 13 percent for 2029, 12 percent for 2030, 11 percent for 2031 and 10 percent from 2032. Assessment periods (Veranlagungszeiträume) 2028 onwards; enacted law, not yet in effect.
A solidarity surcharge of 5.5 percent is levied on assessed corporate income tax. Base is assessed corporate income tax reduced by creditable or refunded corporate tax.
Trade tax is assessed by applying a base rate (Steuermesszahl) of 3.5 percent to trade income; an allowance of EUR 24,500 applies only to individuals and partnerships. Gewerbesteuer; corporations receive no allowance under § 11 Abs. 1 Nr. 1.
Each municipality entitled to levy trade tax sets its own multiplier (Hebesatz), which must be the same for all businesses in the municipality and is 280 percent where the municipality has not set a higher rate. Applies to the multiplier applied to the trade tax base amount; varies by municipality.
The current text states 280 percent; a footnote refers to § 36 GewStG for application, which could not yet be checked window. A Thuringian service description (fimportal.de) still shows the earlier 200 percent figure. Confirm the first assessment period to which 280 percent applies.
The average trade tax multiplier across all German municipalities was 410 percent in 2025. National average; individual municipal multipliers differ.
The standard VAT rate is 19 percent and the reduced rate, for listed supplies, is 7 percent. Umsatzsteuer; the reduced rate applies only to supplies enumerated in § 12 Abs. 2 UStG.
German VAT identification numbers are issued under section 27a of the VAT Act. Needed for intra-EU supplies and acquisitions.
For supplies between businesses that are both established in Germany, the invoice must be an electronic invoice issued, transmitted and received in a structured format that complies with the European e-invoicing standard under Directive 2014/55/EU. Domestic B2B supplies; subject to the transitional rules in de-tax-009. Paper and unstructured electronic invoices are 'other invoices'.
All businesses must be able to receive e-invoices for domestic B2B supplies from 1 January 2025 with no transitional period, while invoices up to EUR 250 and travel tickets are exempt from the e-invoice obligation. Administrative guidance; accepted formats include those compliant with EN 16931 such as XRechnung and ZUGFeRD from version 2.0.1 (excluding the MINIMUM and BASIC-WL profiles). An ordinary e-mail inbox is sufficient for receipt.
The ministry's own FAQ page blocks automated access; the circular was read from a state tax authority download. Later ministry guidance updating this circular may exist and was not reviewed.
Paper or other non-structured invoices remain permitted for domestic B2B supplies made in 2025 and 2026; for supplies made in 2027 they are permitted only if the issuer's total turnover in the previous calendar year did not exceed EUR 800,000, or if the invoice is sent by EDI. Transitional rules for issuing invoices; non-paper other formats need the recipient's consent. No transition applies after 2027.
German entities of groups whose ultimate parent reports annual revenue of EUR 750 million or more in at least two of the four preceding financial years are subject to the minimum tax (Pillar Two), regardless of tax treaties. Mindeststeuergesetz; joint ventures are also covered; threshold prorated for short or long financial years.
The minimum tax act first applies to financial years beginning after 30 December 2023, and its undertaxed profits rule (§ 11) to financial years beginning after 30 December 2024. The UTPR start does not apply to groups whose ultimate parent is in an EU member state that used the Article 50(1) deferral option of Directive (EU) 2022/2523.
Taxpayers must keep transfer pricing records for transactions with related parties, and the group-wide master file (Stammdokumentation) is required only where the company's revenue in the previous financial year was EUR 100 million or more. Cross-border related-party transactions within the meaning of § 1 Abs. 4 AStG.
A corporation is small if it does not exceed two of three limits (balance sheet total EUR 7.5 million, revenue EUR 15 million, average 50 employees) and medium-sized if it exceeds two of these but not two of EUR 25 million, EUR 50 million and 250 employees; above that it is large. Size classes under the Commercial Code; capital-market-oriented companies are always large.
The annual financial statements and management report of corporations that are not small must be audited by a statutory auditor. Kapitalgesellschaften (including GmbH) exceeding the small-company limits in § 267 Abs. 1 HGB.
Annual accounts must be transmitted electronically to the body operating the company register (Unternehmensregister) no later than one year after the balance sheet date. Disclosure duty of corporations; scope of documents depends on size class.
Trade tax returns must be filed electronically, and are due by 31 July of the following year where no tax adviser is involved. Described in a state service entry (Thuringia); the municipality then applies its multiplier and collects the tax.
The service description also gives a later deadline where a tax adviser files; confirm the deadline for the specific year.
Questions on this topic
18 statements on tax, accounting and statutory reporting in Germany
