Corporate income tax (KSt) simply explained: UG, GmbH & other legal forms
Corporate income tax – Most legal forms of business are subject to taxation. Depending on the legal form, income tax, corporate income tax, sales tax, trade tax and/or capital gains tax are due by law. Under certain circumstances, it is possible for some companies to be exempt from one or more of these types of tax. Who pays corporate income tax? How much is corporation tax? What do you have to pay corporation tax on? An overview! Back to: Taxes.
Corporate income tax (KSt) – tax for legal entities
Corporate income tax – KSt for short – is usually levied on the income or profit of legal entities domiciled in Germany and is thus complementary to income tax (ESt), which is usually levied on individuals. Taxable persons typically include corporations, associations, cooperatives and foundations. A limitation of corporate income tax comes into play, for example, if the management and headquarters of the legal entity are located abroad. Political entities, federal companies, state banks and social security funds, professional associations and some others are fully exempt from the obligation to pay corporate income tax.
Other taxes for businesses:
If you want to learn more specifically about taxes for real estate companies, you can learn more here:
Corporate income tax in detail: collection, levy & allowances
As a corporate tax, corporate income tax counts as a community tax and is levied by both the federal government and the states. The amount of the levy is calculated on the basis of the taxable income, which is the result of the profit less special expenses and extraordinary burdens, and is currently 15 percent plus the solidarity surcharge (SolZ), resulting in an overall tax rate of 15.825 percent. Corporate income tax is payable quarterly on March 10, June 10, September 10 and December 10 in equal instalments as an advance payment and is offset against the actual tax liability at the end of each fiscal year.
Dates for advance payment of corporate income tax:
- March 10
- June 10
- September 10
- December 10
As a rule, the corporate income tax return must be filed by 30 April of the following year at the latest for the preceding tax period. Extensions are possible under certain circumstances. Members of the tax advisory professions are generally subject to different deadlines for filing the corporate income tax return.
Allowances for companies without profit distribution
Companies that do not distribute profits – for example non-profit associations – can benefit from a tax-free allowance of currently 5,000 euros, whereas agricultural and forestry cooperatives and associations may be entitled to a tax-free allowance of 15,000 euros. For companies that record losses within the valid tax period, taxation does not apply at all.
Which companies are subject to corporation tax?
Most legal entities are subject to corporate income tax. All corporations – limited liability companies (GmbH), stock corporations (AG), partnerships limited by shares (KGaA), etc. – as well as cooperatives and business cooperatives are usually affected. In addition, mutual insurance companies and mutual pension fund associations have to meet their corporate income tax obligation, as do institutions, foundations, associations, etc. Commercially active public corporations – for example, transport companies or public utilities – are also affected by corporate income tax.
- Acquisition cooperatives
- Business cooperatives
- Mutual insurance companies
- Mutual pension funds
- Commercially active public bodies
Partnerships such as the general partnership (OHG) or the limited partnership (KG) are generally not subject to corporation tax or income tax, but the natural persons and legal entities with partner status belonging to them are. The profit generated by the partnership is subject to uniform and separate determination and is allocated directly to the individual partners in accordance with their legal form: Legal entities must charge their profit shares to corporation tax, natural persons to income tax.
- Partnerships: Legal entities with profit shares
Political parties, professional associations, charitable corporations and federal corporations are generally exempt from corporate income tax.
Overview of company law forms
You can find more information about the different legal forms under the following links. Starting with the sole proprietorship and the registered traders… to the various partnerships and corporations… to other companies such as the family foundation – all the essential aspects of formation, liability, tax burden and more explained simply and understandably! First of all, an overview of the individual legal forms of companies:
- Sole proprietorship (EU)
- Small business
- Registered traders (e. K.)
- Silent partnerships
- BGB companies / civil law partnership (GbR)
- Limited partnership (KG)
- General partnership (OHG)
- Limited Liability Company and Company Limited Partnership(GmbH & Co KG)
- Limited Liability Company and Compagnie General Partnership(GmbH & Co OHG)
- Stock corporation (AG)
- AG & Co KGaA
- Partnership limited by shares (KGaA)
- Limited liability company (GmbH)
- GmbH & Co KGaA
- Entrepreneurial company / UG (limited liability)
- European Company / Societas Europaea (SE)
- SE & Co KGaA
- Stock corporation (AG)
- Other companies
- Foundations / Family Foundations
- Registered associations (e. V.)
- Registered cooperatives (e. G.)
Taxes in Germany: List
Corporation tax (KSt), income tax (ESt), capital gains tax (KapESt), turnover tax (USt), trade tax (GewSt) – who pays what? In this overview of the different types of taxes / tax forms in Germany, you will find relevant taxes for you as an individual and for your business, depending on which legal form you have chosen. Also, after the tax list: How does the tax cycle work around month-end closing, year-end closing and balance sheet? A little insight for those starting their first company. What taxes are there? Simple explanations, definitions, tax optimization, an insight into taxes.