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In this page: Accounting Rules | Tax Rates | Intellectual Property | Legal Framework | Standards | Business Practices

 

Accounting Rules

Tax Year
The tax year begins on 1 January and finishes on 31 December of the same year.
Accounting Standards
Accounting principles and regulations in Germany are in the "German Accounting Standards" - GAS (Deutsche Rechnungslegungs Standards - DRS) which are published by the German standardization bureau: the Deutsches Rechnungslegungs Standards Committee (DRSC). There is no compulsory official accounting plan in Germany. It is up to each company to choose the form, the language and the currency. European companies listed on the stock exchange must establish their annual consolidated accounts on the basis of the IAS/IFRS standards.
Accounting Regulation Bodies
DRSC
Accounting Reports
Unlimited liability companies and partial liability companies (Einzelkaufleute, OHG, KG) must draw up the following accounting documents:
- a balance sheet (Bilanz) in the format decreed by the 4th European Directive of 1978, adapted to German law in 1985;
- a profit and loss account (Gewinnund Verlustrechnung).
Limited liability companies (Gmbh and AG) must add to the two documents above:
- notes to the accounts (Anhang);
- an annual report (Lagebericht).
The financial flow table or cash flow table is not obligatory, except for companies listed on the stock exchange.
Publication Requirements
The obligations of companies relative to the reporting of their accounts depend on their legal form: small company, medium company and large company (defined according to the total of the balance sheet, the net turnover and the members of staff employed).

Limited liability companies (Gmbh and AG), with the exception of small companies and groups of companies, must publish annual accounts and have them controlled by an outside auditor. On the other hand, unlimited liability companies (except KGaA) have no obligation to publish their accounts nor to have them audited.
Professional Accountancy Bodies
WPK - Wirtschaftsprüferkammer , Chamber of Auditors.
IDW - Institut der Wirtschaftsprüfer , Institute of Chartered Accountants
Certification and Auditing
The preparation of the annual accounts must take place less than three months after the end of the financial year for medium and large companies, and less than six months later for small companies. You can contact an external auditor: Price Waterhouse Coopers; Ernst & Young (en allemand); KPMG (en anglais) (en anglais) ; Deloitte & Touche (en anglais)
Accounting News
International Accounting News on Germany

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Tax Rates

Consumption Taxes

Nature of the Tax
Value Added Tax (VAT) called Umsatzsteuer (USt)
Tax Rate
19%
Reduced Tax Rate
A reduced rate of 7% is applied to food, public transport, books and magazines and other products.
No rate is applied to exports.
Other Consumption Taxes
Company expenses are also subject to VAT (Vorsteuerabzug) at the rate of 19%. For more information refer to the German investement promotion agency.

Learn more about Service Providers in Germany on Globaltrade.net, the Directory for International Trade Service Providers.

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Corporate Taxes

Company Tax
The standard rate is 15%.
The effective corporate tax rate including trade tax (assessed independently by each municipality: from 7% to 17.5%) and solidarity tax (5.5% of the amount of the corporate tax) is about 30-33%.
Tax Rate For Foreign Companies
Resident and non-resident companies are charged in the same way concerning consumption tax. 
Capital Gains Taxation
For capital gains on asset disposal, there is a single tax rate of 25% (+ a surcharge of 5.5%).
Capital gains from share transfer in resident and non-resident subsidiaries are exempt from corporate tax up to 95%, whatever the stock and the length of time it has been held.
Main Allowable Deductions and Tax Credits
Companies can carry forward their former loss limited to EUR 511,500. Furthermore, they can carry forward their loss on the payment of interests which is deductible up to 30% of the EBITDA (Profits before interest, tax, depreciation and amortization).
Other Corporate Taxes
In addition to federal and lander taxes, municipal taxes apply, at varying rate from one municipality to the other.
Other Domestic Resources
Consult Doing Business Website, to obtain a summary of the taxes and mandatory contributions.
 

Country Comparison For Corporate Taxation

  Germany OECD United States
Number of Payments of Taxes per Year 9.0 12.0 11.0
Time Taken For Administrative Formalities (Hours) 207.0 176.0 175.0
Total Share of Taxes (% of Profit) 46.8 42.7 46.7

Source: Doing Business - Last Available Data.

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Individual Taxes

Tax Rate

Personal Income Tax Progressive rate from 14% to 45%
From EUR 0 to 8,004 0%
From EUR 8,005 to 52,881 14%
From EUR 52,882 to 250,730 42%
Over 250,730 45%
A surcharge must be added ; it concerns a solidarity contribution. 5.5% of the amount of the income tax.
Church Tax (Bavaria and Baden-Württemberg) 9%
Allowable Deductions and Tax Credits
Insurance bonuses, education and training expenses, retirement expenses, alimony, donations and expenses related to disability are deductable.
Special Expatriate Tax Regime
Germany has signed avoidance of double taxation agreements with many countries in the world. For more information refer to the Ministry of Finance (German only).

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Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed
Centre for German Legal Information (CGerLI)
Withholding Taxes
Dividends: 25%, Interest: 0%, Royalties: 15%/30%

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Sources of Fiscal Information

Tax Authorities
The tax department
The Federal Finance Bureau
Other Domestic Resources
Tax information portal

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Learn more about Taxes and Accounting in Germany on Globaltrade.net, the Directory for International Trade Service Providers.

Intellectual Property

National Organizations
The organization responsible for the protection of intellectual property in Germany is the Deutsches Patent- und Markenamt (DPMA).
Regional Organizations
For the protection of patents: The European Patent Office.
Governing trademarks, designs and models: The Office for Harmonization in the Internal Market.
International Membership
Member of the WIPO (World Intellectual Property Organization)
Signatory to the Paris Convention For the Protection of Intellectual Property
Membership to the TRIPS agreement - Trade-Related Aspects of Intellectual Property Rights (TRIPS)
 

National Regulation and International Agreements

 
Type of property and law Validity International Agreements Signed
Patent
 
PatAnwO (Patent Anwalts Ordnung)
1966
Initial 3 year period of validity
Patent Cooperation Treaty (PCT)
Trademark
 
MarkenG
1995
10 year period of validity Trademark Law Treaty
Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks
Design
 
Industrial Designs
 
Copyright
 
Copyright
70 years after the death of the author. Berne convention For the Protection of Literary and Artistic Works
Convention for the Protection of Producers of Phonograms Against Unauthorized Duplication of Their Phonograms
Rome ConventionFor the Protection of Performers, Producers of Phonograms and Broadcasting Organizations
WIPO Copyright Treaty
WIPO Performances and Phonograms Treaty
Industrial Models
 
Industrial Designs
25 years  

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Legal Framework

Independence of Justice
Judicial power in Germany is independent.
Equal Treatment of Nationals and Foreigners
Germany is a constitutional State. Foreign nationals can always benefit from the same treatment as that reserved for citizens in legal matters.
The Language of Justice
The legal language is German.
Recourse to an Interpreter
Possible
Sources of the Law and Legal Similarities
The main source of the law is the constitution of May 1949 known as the fundamental law which has also become the constitution of reunified Germany. The country's judicial system is based on a system of civil law bringing together indigenous concepts and judicial revisions of different legislative acts by the Federal Constitutional Court. Germany has not accepted the obligatory jurisdiction of the ICJ. As it is part of the European Union, its national law is bound to submit to the conditions of Community legislation.
Checking National Laws Online
German Law Journal
Bundesrecht.de
German Official Gazette
German Official Gazette via Makrolog.de
Ministry of Justice Database
BUND.DE
Deutsche Anwalt Portal

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Standards

National Standards Organizations
German Institute for Standardization
DKE  German Commission for Electrical, Electronic & Information Technologies of DIN and VDE
Association for Electrical, Electronic &Information Technologies
Integration in the International Standards Network
At the European level:
- CEN, European Committee for Standardization
- CENELEC, European Committee for Electrotechnical Standardization
- European Telecommunications Standards Institute (ETSI)

At the International level:
-
International Standards organization (ISO)
- International Electrotechnical Commission (IEC)

- International Telecommunication Union (ITU)

German standards are often used as the basis for the European standardization system.

Classification of Standards
CE, DIN, ISO
Online Consultation of Standards
Beuth
The on-line catalog of European standards
The ISO catalog
The IEC catalog
Certification Organizations
German Institute for Standardization
ISO International Organization for Standardization
Underwriters Laboratories, Inc
VDE - Association for electrical, electronic and information technologies
Technischer Uberwachungsverein e.V. - TUV (Technical Inspection Association)

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Business Practices

General Information
German Business Etiquette
German Business Portal
Opening Hours and Days
Saturday and Sunday are not working days. On Friday afternoons, companies often close about 3 to 4 pm.
 

Public Holidays

New Year's Day 1st January
Epiphany (Bade-Wurtemberg, Bavaria and Saxony-Anhalt) 6 January
Good Friday March or April
Easter Monday March or April
Labor Day 1st May
Ascension the sixth Thursday after Easter
Whit Monday the seventh Monday after Easter
Corpus Christi (Bade-Wurtemberg, Bavaria, Hesse, North Rhine Westphalia, Rhineland Palatinate, Saarland and Thuringe in places where the majority of the population is Catholic) Sixty days after Easter
Assumption (Bavaria (in places where the majority of the population is Catholic) and Saarland) 15 August
German Unification Day 3 October
Reformation Day (Brandenburg, Mecklenburg-Western-Pomerania, Saxony-Anhalt, Saxony, Thuringe) 31 October
All Saints (Bade-Wurtemberg, Bavaria, North Rhine Westphalia, Rhineland Palatinate, Saarland) 1st November
Day of fasting and prayer (Saxony) November
1st day of Christmas 25 December
2nd day of Christmas 26 December
 
 

Periods When Companies Usually Close

Christmas holidays from the end of December to the beginning of January
Easter holidays from Good Friday to Easter Monday
 

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Last Updates: December 2014