The company tax return and what it is composed of
Annual VAT return, Corporate Income Tax return and trade tax return
Legal entities such as AG (public companies), GmbH (private limited companies) and UG (entrepreneurial companies/mini GmbH) must file returns for VAT (VAT return), corporate income tax (corporate tax return) and trade tax (trade tax return) for each financial year.
- Your turnover and claimed input tax must be declared per calendar year in the VAT return.
- The profit before taxes is declared to the tax office in the corporate income tax return.
- In case a corporation has its registered office or its place of management in Germany, it is always subject to trade tax. Exceptions are only possible for the foreign corporations active in Germany.
If you task us with preparing the annual returns, the filing deadline is automatically extended from end of May of the next year to end of February of the year after that.
Withholding tax on dividend distributions
After the shareholders of a corporation decide on a dividend distribution, the company must file a withholding tax on the dividends to the tax authorities and pay withholding tax, if applicable.
Private companies – separate the company assets from private assets
In private companies such as a BGB company, KG (limited partnership) or OHG (general partnership), for uniform and separate identification of profits, the operating profits allotted to each individual shareholder are calculated. Trade tax must only be paid in case a trade is carried on in Germany.
We advise our clients with respect to tax regarding the following
- differentiation between company assets and private assets,
- deposits and withdrawals,
- special operating expenses and special operating revenues,
- correct posting of the capital accounts of the shareholders.
These financial results are assessed by the tax authorities of the place where the respective shareholders have their domicile.
Independent professionals and sole proprietorships – income tax, VAT and trade tax
The income of sole proprietorships and independent professionals is declared in the income tax return. The profits are shown based on payment transactions as the difference between revenues and expenditures in a cash basis accounting. The correct income and expenditure amounts must be calculated and entered in the correct boxes in annex “EÜR” of the income tax returns. We know the complexities involved in income tax returns and declarations and can provide support to your company.
Trade tax must be paid, if the taxpayer carries on a trade in Germany. Independent professionals such as lawyers, notaries, architects, or doctors in private practice are generally exempt from trade tax. The distinction between trade activity and independent professional activity can sometimes be difficult and requires an expert.
Basically, all sole proprietors and independent professionals must file VAT returns. This is also applicable for small companies with turnover of less than €17,500 in the previous year and an estimated turnover not exceeding €50,000 in the current year.