Tax registration guide for limited liability companies in Germany

 

Contents

• Every business in Germany has to register with the right tax office
• When should I fill in the tax questionnaire? 
• A step-by-step guide for the tax questionnaire for corporations:
  • Section 1: General information
  • Sections 3, 4, 5
  • Section 6: Determination of advance payments
  • Section 7: Registration and payment of wage tax
  • Section 8: Registration and payment of VAT
• How do I get a tax number?

 

1. How to start a business in Germany: 

   1.  Develop a business idea
   2.  Advice and preparation
   3.  Choose a legal form
   4.  Name check by IHK
   5.  Notarisation at the notary’s office
   6.  Open a business bank account
   7.  Commercial register entry
   8.  Trade registration
   9.  Registration with the tax office
   10. First steps as an entrepreneur

Every business has to register with the Finanzamt (tax office)

No matter the sector or activity, registering for tax purposes is a must for every newly established business. To do this, you must fill out a tax questionnaire and submit it to the competent tax office (that is, the local tax office responsible for the district in which your registered office is located). If all paperwork is correct, the tax office will register your business by issuing it a Steuernummer (tax number).

Filling out the questionnaire is not easy. To get a tax number for your business as soon as possible, you – of course – have to fill in the tax questionnaire accurately. For example, the expected profit and turnover estimates for the first year of operations should be as realistic as possible. Otherwise, there may be lengthy delays in receiving the tax number. If you want to safeguard against errors and, thus, delays, get help from a tax adviser.

Fill in the questionnaire straight after incorporation

When you start a business, your mission is to get the Steuernummer (tax number) as soon as possible. You need this number to issue invoices. So, be sure to submit the questionnaire quickly, even though you have up to four weeks after setting up the company under Section 138 of the Abgabeordnung (tax code) to register for tax purposes with the Finanzamt (tax office).

Bear in mind that the legal form of your company also plays a role in this process. For example, if you want to set up a GmbH (limited liability company), UG (haftungsbeschränkt) or AG (stock corporation), you have to complete the Fragebogen zur steuerlichen Erfassung: Gründung einer Kapitalgesellschaft beziehungsweise Genossenschaft (questionnaire for tax registration: Formation of a corporation or a cooperative society).

There is no separate questionnaire for every different legal form- such as a GmbH or the GbR. – as these are grouped under a generic term such as Kapitalgesellschaften (limited liability companies) or Personengesellschaften (partnerships) respectively. (Personengesellschaften include, the GbR, KG, GmbH & Co. KG and OHG.)

 

Want to register your partnership or sole proprietorship and not an incorporated company?  

Make sure you fill in the right form:

• Instructions for the tax registration questionnaire for Einzelunternehmen (sole proprietorships)
  

 

You can download the application form from the homepage of the Bundesministerium der Finanzen (Federal Ministry of Finance) and fill it out directly on your computer.

A step-by-step guide to filling out the tax questionnaire for corporations

The tax questionnaire (as of February 2018) has nine sections and is nine pages long. However, the sections do not correspond to the page numbers.

At the top of each page, you will find a box labelled Steuernummer (tax number). Leave this box blank, as the tax office has to first assign it to you.

Section 1: Allgemeine Angaben (general information)

The first section deals with the general details of your company, such as the type of business activities, the company’s legal representative and tax advice. You also have to enter the account details of the business account here.

Participating in the Lastschriftverfahren (direct debit procedure) means that, if necessary, the tax office will automatically collect all amounts due by direct debit when they are due. Opting for this means you never miss a tax payment deadline.

If you have already hired a tax adviser to do your company’s accounting (Jahresabschluss etc.), input the adviser’s contact details in section one and then grant her the Empfangsvollmacht (power of attorney to receive).

Section 2: Angaben zu den Anteilseignern (shareholder information)

This section is about company shareholders. The questionnaire has fields for three shareholders. If there are more than three shareholders, simply print page four again and fill in all shareholders. Attach the additional page to the application.

If a company is a shareholder of the corporation, enter this in the box marked “Firma” (company). If you are the sole shareholder, fill in only the first block and go to section three.

 

 

 

Sections 3, 4, 5

These three sections deal with the formation in cash or in-kind, the business split and additional information about the company.

Here you indicate whether you want to incorporate/form the company using Bargründung (cash) or Sachgründung (in kind).

The most common form of incorporation is a cash one. Here, you only need to tick the box provided for this purpose but do not need to provide any other information.

In the case of a formation in kind, the questionnaire requires you to enter more detailed information about the assets you’re using for the Stammkapital (share capital).

As a rule, you can skip the Betriebsaufspaltung (division of a business) fields in section four – unless, of course, your company is the product of a business split.

Point five, Zusatzangaben zur Gesellschaft (additional information on the company), has to be filled in if:

-Your company is the Komplementärin (general partner) (personally liable partner of a limited partnership) of a GmbH & Co KG.
-There is an atypische stille Beteiligung (atypical silent shareholding) in the company.
-The company is the controlling company or controlled company (for corporation and trade tax or turnover tax/VAT purposes).
-The company belongs to a group of companies.

Section 6: Angaben zur Festsetzung von Vorauszahlungen (information for the determination of advance payments)

Here is where you enter your estimated profit (Gewinn). The tax office will use this information to calculate the advance payments for Körperschaftsteuer (corporation tax) and Gewerbesteuer (trade tax) to be made by the company. You should therefore take special care not to set the profit estimate too high, because then you may have to make high advance tax payments.

For example, if an annual turnover (Jahresumsatz) of €50,000 is forecast, it is advisable to enter only €15,000. For the following year, you can enter a slightly higher amount.

Also, estimate the taxable income (line 186), the tax credits (line 187) and the trade income (line 188) for the year of formation and the following year as accurately as possible. Here too it’s advisable to enter a slightly lower amount to avoid high advance payments.

If your company’s profit is on a trajectory to exceed the forecast in the first business year, set aside cash to pay the extra tax at the end of the business year. Alternatively, you can inform the tax office that you wish to adjust the advance payment. You can do this at any time via your tax adviser.

Section 7: Angaben zur Anmeldung und Abführung der Lohnsteuer (information about the registration and payment of wage tax)

Section seven deals with Lohnsteuer (payroll tax).

Under (a), you must enter the number of all your employees (Mitarbeiter), Managing partners (Gesellschafter-Geschäftsführer), board members (Vorstandsmitglieder) and volunteers (ehrenamtliche Mitarbeiter) also count as employees. Exceptions are managing directors (Geschäftsführer) of a general partnership (Komplementär-Kapitalgesellschaft) who are also limited partners of the Kapitalgesellschaft & Co. KG.

If the managing partner earns no salary, she does not have to be included in the number of employees, as the employment relationship is not relevant for wage tax purposes.

In (b), enter the number of all marginally employed (geringfügige Beschäftigung) persons from your company – these must also appear in (a).

In addition, input the start of wage payments and an estimate of wage tax payments.

Unless there are several registered offices (Firmensitze) of your enterprise, you can ignore lines 192-195.

Section 8: Anmeldung und Abführung der Umsatzsteuer (registration and payment of VAT)

The last section of the tax registration questionnaire is about turnover.
Under 8.1, indicate the turnover you expect to generate in the first fiscal year of operations (i.e., the year you incorporated your company). Then do this for the year after (i.e., your second year of operations).

You can skip point 8.2, Geschäftsveräußerungen im Ganzen (sale of a business as a whole), if there has been no transfer of a business (or the operations of a business) as a whole.

In section 8.3 indicate whether you wish to use the Kleinunternehmerregelung (small business regulation). To do this, your turnover can’t exceed €22,000 in the first business year and no more than €50,000 in the second year. The Kleinunternehmerregelung (small business regulation) sets you free from paying VAT. Conversely, however, this also means you cannot claim any VAT you have already paid from the tax office.

You can apply for tax exemption under point 8.4 if, according to § 4 UStG, tax-exempt turnover is fully or partially realised. Something that applies to a company if, for example, it delivers goods outside of Germany to European or non-European countries.

In section 8.5, you must state whether you intend to offer or sell services or products that have a tax rate of 7%. If you are unsure whether this applies to you, check with your tax adviser. If your business only generates turnover at the standard VAT rate of 19%, tick “no” here.

Under item 8.6 you can select average rate taxation, but this is usually only relevant for agriculture and forestry. You can read here how the tax reduction according to § 24 UStG works and for whom it is worthwhile.

Section 8.7 deals with Istversteuerung (actual taxation) and Sollversteuerung (debit taxation). If you expect a turnover of less than €600,000 in your first business year, you can choose between the two types of taxation. With Istversteuerung (actual taxation), the entrepreneur can pay the VAT only after the customer has actually paid the tax and not when the invoice is issued. This goes a long way in the battle against liquidity bottlenecks. But, this type of taxation is only possible if business turnover is less than €600,000. That is, if you expect a higher annual turnover, then the only option is Sollversteuerung (debit taxation).

With point 8 of the questionnaire, section 8.8, you apply for the VAT identification number. You need this number if you want to purchase intra-European supplies and services for your business free of VAT. You will receive the VAT ID number a little later than the normal tax number.

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Section 9: Freistellungsbescheinigung (certificate of exemption)

If your company is a construction company, you can apply for an exemption certificate under section nine under § 48 b of the Income Tax Act (EStG).

In lines 220 – 226, tick which attachments you are sending to the tax office along with the tax registration form.

 

The last step in getting a Steuernummer (tax number)

If the tax office requires further documentation in addition to the tax registration questionnaire, make sure you submit everything together. Once you’ve sent the application, it’ll take the authorities at least a few weeks to process it. Once the tax office approves the application, they’ll send out a letter containing your Steuernummer (tax number). This number officially registers you with the tax office.