How much taxes are you paying in germany with a UG?

A German UG (Unternehmergesellschaft, haftungsbeschränkt) is subject to the following taxes:

1. Corporate Income Tax (Körperschaftsteuer)

• Rate: 15% of the company’s taxable profit.
• Solidarity Surcharge (Solidaritätszuschlag): 5.5% of the corporate income tax.
  • Effective rate: 15.825% (15% + 0.825%).

2. Trade Tax in germany (Gewerbesteuer)

• Rate: Varies depending on the municipality.
• Minimum: 7% (national minimum).
• Typical range: 14% – 17% (in most cities).
• Example:
  • Berlin: ~14.35%
  • Munich: ~17.15%

3. VAT (Umsatzsteuer) tax in germany

• Standard rate: 19%.
• Reduced rate: 7% (for certain goods/services).
• Small Business Exemption: If annual revenue is below €22,000, you can apply for a VAT exemption (Kleinunternehmerregelung).

4. Withholding Tax on Dividends (Kapitalertragsteuer)

• If profits are distributed to shareholders, a 25% withholding tax applies.
• Plus 5.5% solidarity surcharge on the 25%, making the effective rate 26.375%.
• If the shareholder is a legal entity (e.g., another company), exemptions or reductions may apply.

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Example Calculation:

Let’s assume a UG earns €100,000 in profit in Berlin.

1. Corporate Income Tax (15% of €100,000) → €15,000
2. Solidarity Surcharge (5.5% of €15,000) → €825
3. Trade Tax (~14.35% of €100,000) → €14,350
4. Total Taxes Before Distribution: €30,175
5. Net Profit After Taxes: €69,825
6. Dividend Tax (if distributed) → €18,423
7. Final Net Income (after all taxes): €51,402

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Summary of Effective Tax Rates

If profits are distributed: ~45-50% total tax burden.

If profits stay in the UG: ~30% tax burden.

Visit our local Trustee and Nominee Website or contact us if you have any questions.