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You run a GmbH or UG

Taxing a GmbH and distributing profits

Understand corporate income tax, distributions and the tax contribution account, compute corporate income tax, compare a distribution with a managing director's salary, check the partial-income method, and file the corporate income tax return and the capital yields tax return: 10 steps.

Start here: Computing German corporation tax and trade tax

Understand: corporate income tax, profit distribution, contribution account

  1. Step 1 of 10
    CoursePaid individually38 min

    Computing German corporation tax and trade tax

    The descending rate path of § 23 KStG down to 10 % from 2032, the solidarity surcharge with no threshold for corporations, and then the four steps of trade tax: trading income with the weighted add-backs of § 8 no. 1, rounding before allowance, a tax base figure of 3.5 % and the municipality's multiplier. Two modules with fully worked cases.
  2. Step 2 of 10
    CoursePaid individually60 min

    Profit distributions and the contribution account of a GmbH

    How money gets from a German GmbH or UG to its shareholders: the corporation tax and determination returns with their deadlines, the distribution resolution and its day of receipt, and the hidden profit distribution as a costly detour. Then the 25 % withholding tax with solidarity surcharge that the company deducts, reports and pays over on receipt, and the cases in which it refrains. Finally the tax contribution account with its order of use and certificate, the § 8b KStG exemption and the partial-income method. Three modules with case studies worked from the statute.

Compute: corporate income tax, distribution or salary, partial-income method

  1. Step 3 of 10
    CalculatorFree result

    German corporation tax — rate by assessment period

    German corporation tax is 15 % of taxable income up to assessment period 2027, then steps down year by year to 10 % from 2032.
  2. Step 4 of 10
    CalculatorFree result

    German trade tax calculator — base amount and municipal multiplier

    German trade tax arises in three steps: round the trade profit down to whole hundreds of euros, deduct the allowance (individuals and partnerships only), take 3.5 % of the remainder as the base amount — then apply the municipality's multiplier.
  3. Step 5 of 10
    CalculatorFree result

    Dividend or director's salary? — German GmbH tax comparison

    A distributed profit first bears the company's taxes (trade tax, corporation tax and solidarity surcharge — trade tax is not deductible) and then the flat tax on capital income. A salary is a business expense for the GmbH and is taxed only in the director's hands, at their marginal rate. Which route wins depends on the marginal rate and on the municipal multiplier.
  4. Step 6 of 10
    CalculatorFree result

    German partial-income method — 40 per cent exempt, 60 per cent deductible

    Receipts from shares held as business assets are 40 per cent tax-free; in return, the related expenses — financing costs, book value, selling costs — are only 60 per cent deductible, even in years with no receipts at all.

File: corporate income tax return, capital yields tax return, return of contributions

  1. Step 7 of 10
    FormFree60 min

    German corporation tax return (KSt 1)

    The income tax return of a GmbH, UG or association: why the separate-assessment declaration belongs with it, which assessment period applies when the financial year deviates, and when advance payments start running earlier. Guide, deadlines and worked example.
  2. Step 8 of 10
    FormFree45 min

    German trade tax return (GewSt 1 A)

    What you declare is the base amount, not the tax: why the tax office assesses and the municipality levies, when an apportionment declaration is added, and what the statutory 280 per cent multiplier really means. Guide, deadlines and worked example.
  3. Step 9 of 10
    FormFree25 min

    German capital yields tax return (Kapitalertragsteuer-Anmeldung)

    File AND pay — for a distribution on the day the income accrues, otherwise by the tenth of the following month: why the return is due even when nothing had to be withheld, and when a shareholder is entitled to a tax certificate.
  4. Step 10 of 10
    FormFree45 min

    Determining a repayment of contributions (§ 27(8) KStG)

    No application, no repayment of contributions: the payment then counts as a DISTRIBUTION in the shareholder's hands. Twelve months from the end of the financial year, an order of priority you cannot choose, and a certificate that cannot be issued late. Guide and worked example.

The other paths

A different procedure, the same principle: the three pillars in order.

Read in German