A German GmbH does not just pay corporate income tax — it pays a stack of four different taxes. Between the headline corporate tax rate of 15% and the real total burden lies a wide gap. To find out how much of €100,000 in profit ends up in the shareholder's pocket, you have to add four taxes together. The German corporate tax calculator does this in one click.
Körperschaftsteuer — the federal share
The corporate income tax (Körperschaftsteuer) per §23 Abs. 1 KStG is a flat 15% of the corporation's taxable profit. The rate has been unchanged since the corporate tax reform of 2008. For corporations it replaces the personal income tax on the profit — the company's earnings are not attributed to the shareholder until they are distributed.
On top of that comes the solidarity surcharge of 5.5%. Unlike for individuals (where the surcharge has largely been abolished), corporations pay Soli from the first euro of corporate tax. Effectively that means 15% × 1.055 = 15.825%.
Trade tax (Gewerbesteuer) — the municipal share
The trade tax is the single largest tax line for a typical GmbH and varies dramatically by location. It is calculated in two steps:
- Base assessment (Steuermessbetrag): profit × 3.5% (§11 Abs. 2 GewStG)
- Trade tax: base × municipal Hebesatz / 100
A GmbH — unlike a sole proprietor or partnership — receives no allowance of €24,500. It pays trade tax from the first euro. The Hebesatz is set by the municipality and ranges in 2026 from about 200% (small rural communities) to 580% (Oberhausen). Munich is at 490%, Berlin 410%, Hamburg 470%. Germany-wide average: ~405%. A standalone view of the trade tax alone is in the trade tax calculator.
At a Hebesatz of 400%, the GmbH pays 14% trade tax on its profit — almost as much as the corporate tax itself.
Total burden on the company level
Added together at Hebesatz 400%:
- Corporate income tax: 15.000%
- Solidarity surcharge: 0.825% (5.5% of 15%)
- Trade tax: 14.000%
- Total: ≈ 29.83%
The figure varies with the Hebesatz: at 250% it drops to about 24.6%, at 580% it climbs to about 36.1%. Choosing the right municipality is no small matter.
Worked example: €100,000 profit, Hebesatz 400
| Item | Amount (€) |
|---|---|
| Annual profit | 100,000 |
| Corporate income tax (15%) | −15,000 |
| Solidarity surcharge (5.5% on KSt) | −825 |
| Trade tax (3.5% × 4.0) | −14,000 |
| Total company-level tax | −29,825 |
| Profit after corporate taxes | 70,175 |
Step 2: Distribution to the shareholder
If the profit stays in the GmbH (retention), the tax story ends here. If it is distributed, the private shareholder pays withholding tax (Abgeltungsteuer) per §32d EStG: 25% on the gross dividend plus 5.5% Soli on the withholding. Effectively that is 26.375% of the dividend. The same mechanism applies to any dividend from a listed company — readers of the dividend calculator already know it.
Applied to the €70,175 from the example:
- Gross distribution: €70,175
- Withholding tax (25%): −€17,544
- Soli (5.5% on top): −€965
- Net to shareholder: €51,666
Of the original €100,000 profit, a total of 48.33% is paid in taxes — despite the "low" headline rate of 15% the GmbH is no tax shelter once profits are distributed.
When the GmbH pays off — and when it doesn't
Advantages of the GmbH
- Limited liability capped at the share capital (€25,000).
- Low burden under retention (~30%) — meaningfully below the personal top tax rate (45% + Soli ≈ 47.5%). Retaining and reinvesting profits inside the GmbH defers the second-stage tax indefinitely.
- Separation of private and business assets, easier sale of shares, clean structures for outside investors.
- Possibility of a holding structure: dividends from a subsidiary are 95% tax-exempt at the holding level under §8b KStG.
Disadvantages
- Double taxation on distribution — every euro is taxed once at the company level and once at the shareholder level.
- Higher administration cost: full balance-sheet accounting, notarial deeds for shareholder resolutions, mandatory disclosure in the Bundesanzeiger.
- Share capital of €25,000 (€12,500 to be paid in) — locks up liquidity.
- No trade-tax allowance like sole proprietorships or GbRs receive.
GmbH vs. sole proprietor — the burden comparison
For low profits the sole proprietor is often cheaper: the German basic tax allowance of €12,096 stays tax-free, and the trade-tax credit under §35 EStG (up to a Hebesatz of ~380%) makes trade tax effectively neutral for the sole proprietor. Only above roughly €60,000–€80,000 of annual profit does the GmbH (especially with retention) start to look attractive on a tax basis.
Anyone considering the trade-off should first compute personal income tax with the German income tax calculator and put it next to the GmbH burden.
Optimisation levers
- Choice of location: a lower Hebesatz saves cash immediately. Example: 250% instead of 400% reduces trade tax from €14,000 to €8,750 on €100,000 profit.
- Managing-director salary as a deductible expense — lowers the company's taxable profit. Caveat: for shareholder-managers the salary must pass an arm's-length test, otherwise it counts as a hidden distribution.
- Pension promise for the shareholder-manager reduces today's profit and provides for retirement.
- Retain instead of distribute — defers the shareholder-level tax for as long as profits remain reinvested.
- Holding structure: profits flow from the operating GmbH to the holding 95% tax-free under §8b KStG, ready to be reinvested.
Common misconceptions
- "A GmbH pays only 15% tax." Wrong — that is only the federal share. With Soli and trade tax you land at ~30%, with full distribution at ~48%.
- "In loss years the GmbH gets a tax refund." No. Losses can be carried back or forward, but there is no automatic refund mechanism like wage-tax compensation for employees.
- "The solidarity surcharge was abolished in 2021." Only for personal income tax (and only for the majority of taxpayers). Corporations and capital income are still subject to it.
Bottom line
The headline 15% corporate rate hides what a GmbH actually pays. Add the solidarity surcharge and trade tax, and you reach ~30% on the profit; add full distribution, and you arrive at ~48% effective total burden. Whether the GmbH is the right legal form depends on profit, location, distribution policy and the comparison with personal income tax. The German corporate tax calculator works it out in two clicks — and the trade tax calculator or the German income tax calculator will round out the picture for the sole-proprietor alternative.