Legal form | Lukinski https://lukinski.com Tue, 01 Mar 2022 15:16:40 +0000 en-US hourly 1 https://wordpress.org/?v=6.8.5 Taxes in Germany: Income tax, corporate tax, capital gains tax, trade tax & Co. – List https://lukinski.com/taxes-in-germany-income-tax-corporate-tax-capital-gains-tax-trade-tax-co-list/ Wed, 10 Mar 2021 17:22:46 +0000 https://lukinski.de/taxes-in-germany-income-tax-corporate-tax-capital-gains-tax-trade-tax-co-list/ Taxes in Germany – 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 company, depending on which legal form you have chosen. In addition, after the tax list: How does the tax cycle work around monthly financial statements, annual financial statements and balance sheets? A little insight for those who are starting their first company and are looking for a good tax advisor. What taxes are there? Simple explanations, definitions, an insight into taxes.

Corporate income tax (KSt)

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?

Income tax (ESt)

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. How much income tax do I have to pay? How do you calculate income tax? How much income tax do I pay? What do I pay income tax on?

Capital gains tax (KapESt)

Capital gains tax – Most legal forms of business are subject to tax. 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. What percentage is capital gains tax? What is the capital gains tax exemption amount? When is capital gains tax payable? How much is capital gains tax?

Value added tax (VAT)

Value added tax – Most legal forms of business are subject to tax. 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. What is the value added tax? What is the difference between VAT and sales tax? What is sales tax, simply explained?

Trade tax (GewSt)

Trade 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 exempted from one or more of these types of tax. When is trade tax payable? How much trade tax is payable? Who is subject to trade tax? When do you not have to pay trade tax?

Tax cycle: taxes simply explained

For those who are confronted with the topic of taxation for the first time, here is a short explanation of the typical “tax cycle”.

Taxes explained simply: taxation of income and profit

Taxes are complex and a simple explanation is hard to come by, but possible if you start by looking at the following:

  1. All inputs / outputs are documented (accounting)
  2. All income must be taxed
  3. Against income, expenses are calculated
  4. Monthly submission to the tax office as an “interim balance sheet
  5. Annual financial statements as “balance sheet
  6. You pay tax on your profits

Calculate profit (simple):

Profit / loss = income – expenses

Example Invoice:

  • 10.000 Euro = 100.000 Euro – 90.000 Euro

Here’s another look at the mechanism behind the tax system:

Monthly closing: Regular submission

Regardless of whether it is a company or a private person, once a month “accounts are settled” and once a year an “overall conclusion” is drawn (balance sheet).

Private individuals – Private individuals have relatively little to do with this monthly evaluation. The job is “done” by your employer. The gross salary is your salary before you have paid taxes and social security contributions. In the net salary, everything has already been deducted. Therefore, private individuals, or employees, have the monthly statement and contributions theoretically done automatically. It is different for companies, they have to prepare this “statement” themselves.

Company – The majority of companies submit their figures every month. The so-called monthly statement. Here, the income and expenses are summarized, the whole is then sent to the tax office. Either by the entrepreneur himself or by an appointed tax advisor.

Month End Closing – The month end closing then contains all the income and expenses of the business as just described. This includes all items that are incurred by the company:

  • Material purchase
  • Power
  • Communication costs
  • Wages for employees
  • Health insurance contributions
  • …

Of course, also the income, from delivery and performance but also capital gains. Both are taxed differently! While the income tax, or the trade tax, is relatively high, the capital gains tax is only 25%.

That is why it is worthwhile to let money “work”, through shares, currency trading or much less risky: real estate as a capital investment.

Exceptions (quarterly) – There are a few small exceptions, e.g. if the company is still very small and has little turnover. After a certain period of time, e.g. two or three years, such companies are allowed to submit their sales on a quarterly basis. However, this does not happen with real estate investors.

Annual financial statements: Taking stock

Simply explained, the balance sheet occurs at the end of the year. Just as the monthly financial statement summarizes the calendar days of a month, the annual financial statement summarizes the twelve months of the year. From this, you (or usually your tax advisor) create your balance sheet.

In this balance sheet you can then read all accounts, assets, the most important statements and key figures about your company. In summary, the annual financial statement.

So the control game itself is relatively simple

As soon as you have registered a company, you make a monthly statement of accounts, punctually at the start of the new month, at the latest by the 10th of the following month (deadline). At the end of the year, or at the beginning of the following year, you then prepare the annual accounts, which summarise all your financial and accounting activities.

Want to learn more about taxes? Then read through the different types of taxes above, from personal income tax, to business tax for companies, to capital gains tax, which applies to both individuals and companies. Of course, there are also other special cases, such as payroll tax, and much more.

Owner: Save taxes with real estate

Taxes are an important topic. The more you earn, the greater the tax burden. At some point, taxes are your biggest expense. By choosing the right legal form, you can save a lot of money as a landlord or real estate investor. Classics are, for example, the real estate GmbH or the family foundation. Learn more about real estate, taxes and saving taxes with real estate here.

]]> Trade tax (GewSt) explained simply: Calculation, tax-free amount and assessment rate https://lukinski.com/trade-tax-gewst-explained-simply-calculation-tax-free-amount-and-assessment-rate/ Mon, 08 Mar 2021 14:09:26 +0000 https://lukinski.de/trade-tax-gewst-explained-simply-calculation-tax-free-amount-and-assessment-rate/ Trade 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 exempted from one or more of these types of tax. When is trade tax payable? How much trade tax is payable? Who is subject to trade tax? When do you not have to pay trade tax? An overview! Back to: Taxes.

Trade tax (GewSt) – tax for commercial enterprises

As a rule, trade tax – GewSt for short – is levied on the income of every German commercial enterprise and is therefore based on the objective earning power of the respective company. Since limited liability companies, stock corporations and the like are always regarded as commercial enterprises by virtue of their legal form, trade tax is mandatory for corporations – regardless of the composition of the founding team.

Other taxes for businesses:

If you want to learn more specifically about taxes for real estate companies, you can learn more here:

Trade tax in detail – collection, levy & allowances

As an object or property tax, trade tax is by its nature one of the real taxes. Effectively, it belongs to the municipal taxes and contributes significantly to their financial system. The municipalities are entitled to levy the tax and set the tax rate valid for one year by resolution. Trade tax is payable quarterly in equal instalments on 15 February, 15 May, 15 August and 15 November. As of the 2008 tax period, these taxes are no longer deductible as a business expense, but can be offset as a lump sum against the income tax payable.

Dates for advance payment of business tax:

  • February 15
  • May 15
  • August 15
  • November 15

According to the Trade Tax Act (GewStG), natural persons and partnerships may offset their tax burden with an exemption amount – currently 24,500 euros; legal entities may reduce their tax burden by a reduced exemption amount – currently 3,900 euros.

Which companies are subject to GewSt?

Most commercial enterprises are charged with trade tax. Since all corporations are in principle considered to be commercial enterprises, this type of tax is particularly relevant for the limited liability company (GmbH) and the stock corporation (AG).

In addition, the general partnership (OHG) and the civil law partnership (GbR) are usually subject to trade tax – at least insofar as their annual income exceeds 24,500 euros. However, a GbR among freelancers remains exempt from trade tax. The same applies to the freelancers themselves: A sole proprietorship only has to pay trade tax levies if the company founder is a small trader or a registered merchant (e. Kfm.).

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:

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.

]]> Capital gains tax (KapESt): How much? Allowance, GmbH, Shares & Law https://lukinski.com/capital-gains-tax-kapest-how-much-allowance-gmbh-shares-law/ Mon, 08 Mar 2021 14:00:24 +0000 https://lukinski.de/capital-gains-tax-kapest-how-much-allowance-gmbh-shares-law/ Capital gains tax – Most legal forms of business are subject to tax. 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. What percentage is capital gains tax? What is the capital gains tax exemption amount? When is capital gains tax payable? How much is capital gains tax? An overview! Back to: Taxes.

Capital gains tax (KapESt) – tax on profit distribution

Tax law provides that – in addition to the income tax of any natural person with shareholder status – capital gains tax is levied on all natural persons resident in Germany who benefit from a distribution of profits. As a result, the recipient – but not the corporation – is burdened. The capital gains tax burdens both the profit income of shareholders of a GmbH and the distribution of dividends to shareholders of a stock corporation.

Other taxes for businesses:

If you want to learn more specifically about taxes for real estate companies, you can learn more here:

Capital gains tax in detail – collection, levy & special cases

For the sake of simplicity, 25 percent of the dividend is withheld directly by the AG for share holders, similar to the way regular employers withhold wage tax (LSt) for their taxable employees. Capital gains tax – abbreviated to KESt, KapESt, KapErtSt or KapSt – is a special form of income tax levied here: Once the tax burden has been withheld, the income tax is deemed to have been paid and the income does not have to be declared in more detail – at least insofar as no other type of income applies or the special tax rate applies.

If, on the other hand, the registered office of a shareholder is abroad, the so-called withholding tax comes into effect and the provisions of the double taxation agreement (DTA) of the respective country must be taken into account. The final withholding tax is also levied on shares held as private assets within Germany.

Allowance for single persons & partners

The banks grant different options so that taxpayers can use tax-free amounts for themselves and, if necessary, distribute them. The so-called saver’s allowance is generally available to everyone and currently amounts to €801 per year for single persons and double that amount for spouses and registered partners: €1,602. The first euro above the exemption limit and all subsequent amounts are taxed as usual at 25 percent.

Which companies are subject to capital gains tax?

Most natural persons are subject to income tax. If they are also shareholders in a corporation – for example, a limited liability company (GmbH) or a stock corporation (AG) – capital gains tax also applies in many cases. The capital gains tax is also commonly referred to as the flat rate withholding tax (Abgeltungsteuer) and primarily taxes dividends and interest income at a flat rate of 25 percent. Usually, the tax office is informed automatically by the banks, similar to the way an employer pays the wage tax for his employees.

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:

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 company, depending on which legal form you have chosen. In addition, after the tax list: How does the tax cycle work around monthly financial statements, annual financial statements and balance sheets? A little insight for those starting their first company. What taxes are there? Simple explanations, definitions, tax optimization, an insight into taxes.

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