taxes in Germany
November 20, 2021
The most significant tax that all employees and business owners in Germany have to pay is the income tax. People should pay the income according to […]
January 6, 2024
An overview of the usual tax terms and the tax system in Germany
Tax terms are often difficult to understand. Since the German tax system is very complex, it becomes more difficult to understand these terms, especially for expats. Therefore, to avoid possible mistakes when paying taxes in Germany, you should familiarize yourself with some of the most common terms. The most important are:
• Tax Office: Finanzamt
• Gross salary: Brutto
• Net salary: Netto
• Salary certificate: Wohnbescheinigung
• Tax declaration: Steuererklärung
• Tax identification number: Steueridentificationsnummer
• Tax number: Steuernummer
• Tax rate: Steuersatz
If you are not thoroughly familiar with German tax terms and laws, we recommend seeking help from a tax advisor to fill out your tax return.
February 23, 2024
An overview of important tax tips for startups in Germany
As the founder of a startup in Germany, you should be fully familiar with the types of taxes that you will be required to pay after starting your business. For this purpose, it is better to get help from a tax advisor in Germany. Here, we briefly mention ten important tax tips for startups in Germany:
1. After registering your business in Germany, complete the tax registration questionnaire and submit it to the tax office. Then, apply for a tax number.
2. Estimate the profit from your business in the first year for the tax office.
3. Read German tax paragraphs and learn about tax saving tricks.
4. Reduce your tax burden by forecasting your business expenses.
5. If you start your business in Germany after a period of unemployment, you can use German tax laws to optimize your business tax.
6. Take advantage of tax benefits for founders in Germany.
7. In the first two years after registering your business in Germany, you must calculate your tax monthly for the pre-registration of the tax return and report it to the tax authorities.
8. According to the amount of profit, the legal form and the size of your business in Germany, use the correct method of determining the profit.
9. Pay attention to corporate performance tax.
10. You can reduce your business tax burden by registering a Gewerbe business in Germany.
April 22, 2024
Summary of important information about the VAT number in Germany
• The responsible tax office, as one of the departments involved in the business registration process in Germany, will automatically be notified of your business registration at the trade office.
• You must apply for a sales tax number when you start your business in Germany and as soon as the business license is available. The reason for this is that you have to correctly record all the financial transactions of your business in the accounts from the beginning.
• Receipt and collection of sales tax is part of a commercial activity. Finally, you must pay it to the tax office by mentioning your requested tax number.
• To obtain a VAT or sales tax identification number, you can submit your application online when registering your business and as part of your tax registration. Another way is to submit your request in writing and directly to the responsible federal tax office.
• VAT number is used in Germany to facilitate trade with other EU member states. Note that the corresponding country code will be placed in front of the numerical sequence.
• The German sales tax law explicitly states that you can use the VAT ID number on your invoices instead of the personal tax number.
• Small businesses in Germany are not required to declare sales tax as long as they do not exceed the limit. It is essential for cross-border trade in the European Union to Obtain a VAT identification number.
June 19, 2026
Consider these four categories of costs together:
• Legal and official translation costs
• Mandatory membership in the Chamber of Commerce or Crafts
• Monthly collaboration with a tax advisor
• The company's share capital, along with banking and insurance costs
By considering these costs, you can get a more realistic picture of what is required to register a company in Germany. Most entrepreneurs who come to Germany from outside the EU to start a business initially focus only on the amount advertised for the "official company registration." As a result, they overlook the total costs that can be added to this amount along the path. This lack of awareness can have the following consequences:
• A sudden halt to the project midway through
• Unexpected financial pressure that robs you of the peace of mind and focus needed to launch a new business.
However, the good news is that almost all of these costs are predictable. You only need to start with an accurate and realistic picture of German laws and regulations from the very beginning.
