Blog

All articles from firma.de

Liquidation in Germany: How to dissolve a company

Summary In liquidation, a company such as a GmbH or UG is formally closed through a structured legal process. The shareholders pass a resolution to dissolve the company and appoint liquidators to settle its affairs. All assets must be sold, debts paid, and creditors publicly notified. A mandatory waiting period allows any remaining claims to surface. …

Authorised signatory in Germany: German law explained

Summary Authorised signatory 💬Prokurist is a formal commercial power of attorney under German law, granting wide-ranging representation rights. It must be registered in the Commercial Register and can only be granted by merchants or managing directors of registered companies. The authorised signatory may conduct nearly all business transactions but cannot, for example, sign annual accounts or …

Business insurance in Germany: A guide to protecting your company

Summary Starting a company in Germany brings various risks—from third-party liability to damage of your business assets or cyber incidents. Essential insurance types include business liability insurance, professional liability insurance, cyber insurance and others. Choosing the right mix depends on your industry, business size and unique risk profile. Contents Assessing your needs Public liability insurance …

What is trade tax in Germany? Basics for businesses

Summary Trade tax (Gewerbesteuer) is a municipal tax on commercial profits, calculated as profit × 3.5% base rate × local assessment rate (Hebesatz). Sole proprietors and partnerships receive a €24,500 allowance (associations €5,000), while corporations get none. Payments are made as advance instalments based on profit forecasts and reconciled in the annual return. The tax …

How much is corporation tax in Germany? Rates, scope and legal basis

Summary Corporation tax is a nationwide 15% tax on the profits of UG, GmbH, AG and other legal entities, applied to both distributed and undistributed profits. A solidarity surcharge and, typically, trade tax also apply. German-resident corporations are taxed on worldwide income, while non-resident corporations are taxed on German-source income. Taxable income starts from the commercial …

VAT in Germany explained: Rates, rules and reporting obligations

Summary VAT in Germany applies to nearly all goods and services supplied for payment. The standard rate is 19%, with a reduced rate of 7% for essentials like food and books. Businesses earning over €25,000 must charge VAT and submit advance returns through the ELSTER portal. Correct bookkeeping and valid invoices are essential for claiming …

Capital gains tax in Germany explained: How investment income is taxed

Summary In Germany, capital gains tax is a flat 25% tax on income from interest, dividends, or selling shares. A small solidarity surcharge and church tax may also apply. The bank usually takes the tax automatically, so investors do not have to file separately. Everyone has a yearly tax-free allowance before the tax is charged. …

What is income tax in Germany? How it works and who is liable

Summary Income tax is a direct, progressive tax on the income of natural persons, covering seven income types (e.g., employment, self-employment, business, rentals, capital). Liability is generally unlimited for residents and limited to German-source income for non-residents. Partnerships don’t pay income tax themselves; their partners are taxed individually. Your tax base is the taxable income …

Capital reserve explained: Legal purpose and use in German LLCs

Summary German corporations such as GmbH, UG (haftungsbeschränkt) and AG must allocate part of their annual profits to reserves. Companies must distinguish between different types of reserves, such as the capital reserve and retained earnings reserve. UGs in particular must transfer at least 25 % of their annual profit (after prior-year losses) into a legal …

Self-employed and side job in Germany: How to navigate health insurance

If you’re self-employed and have a side job in Germany, your health insurance status can get complicated. This guide explains how to assess your main income type, what rules apply, and how to make sure you’re properly insured.

German payslip explained: How to read salary statements

Summary In Germany, a payslip shows your gross earnings, special payments (bonuses, allowances), and then subtracts taxes and social contributions (health, pension, unemployment, nursing care). It also lists deductions like wage tax, church tax, and solidarity surcharge. Your net salary appears after all these deductions. It may include employer contributions or benefits (e.g. capital-forming payments). …

What are the non-wage labour costs in Germany?

Summary When calculating labour costs in Germany, employers must include all non-wage components beyond regular salaries. These additional expenses typically represent about 21 % of gross wages and cover social insurance, health, pension, accident and care contributions. Further levies such as U1, U2 and insolvency insurance also add to the total cost. Accurately understanding these …