German Local Trade Tax
Why would we say that trade tax is of German characteristics? Because it is different from the corporate income tax, which is charged by the German Federal Government and it is difficult to find a similar tax from other countries to compare with. The trade tax is set by local authorities. Although part of it has to be forwarded to the higher authority, it is still a great amount of income for the local government.
It is calculated in a simply way as follows:
The taxable income of the company, which is based on personal income tax law or corporate income tax law and added or deducted with some other items, is multiplied with the tax base rate (3.5%), and results in the so/called tax base amount. The tax base amount is then multiplied with the corresponding municipal multiplier (from 200% to 500%), which results in the sum total of trade tax which is due.
Due to the importance of the tax income to the local community, the items added or deducted are complicated and multifarious, which are more strictly defined than the corporate tax calculation.
Each local community/municipality can set its own multiplier. In General, the multiplier is higher in big cities than in rural areas; in western area than in eastern area.
Munich as a big city has the multiplier set to 490%, which is one of the highest in Germany. On average, the multiplier is between 240% and 360%, but may not less than 200%. There is no upper limit for the multiplier. With this power, the local community can regulate its policy as a company location. A lot of small communities or rural areas have lower multiplier than cities, which may attract more investment. For the local it is an essential income for the authority. For example, if a big corporate locates in a small village. It will bring a great amount of trade tax to the community, whose residents will profit from it. With this fund the village could offer free kindergarten or renovate the theatre. On the other hand, it may be fatal to the finance of the local government if the big corporate goes bankrupt or simply moves away.
The trade tax multiplier in eastern part of Germany is lower than in the western part. The reason is that after the reunification the federal government has given them a lot of development funds, which made the trade tax not so vital to the community income and they could lower the multiplier to attract more investment.
If a company has many subsidiaries or operating sites in different communities in Germany, it will be treated as a whole entity when it refers to calculating the tax base amount for trade tax. The different communities will then share the trade tax.
The local trade tax cut the profit of the company, while it is an important income to the local authority. This expectancy arose many fierce discussions about local trade tax, such as cancellation of the local tax suggested by the companies, or other way of taxation for the local community such as increase of VAT rate etc. However, none of them got approved.
Trade tax is an important element for companies when it comes to location selection in Germany.
The law firm was established in 2003 by Dr. Artur Bunk, an Attorney-at-Law. Qualified in 1995, he was admitted to the Frankfurt Bar in 1997 after obtaining an LL.D. in European Law at the University Viadrina in Frankfurt (Oder). During his career he has worked with the German law firm Pünder, Volhard, Weber & Axster (now Clifford Chance), was Head of Office at Rödl & Partner in Poland, and Senior Legal Counsel at the Legal and Restructuring Department of KfW. In addition to German, he also speaks fluent English and Polish.
Our offices are based around 45 minutes from Frankfurt/Main International Airport in and approx. the same distance from Frankfurt City.
Thanks to the professional experience and background of our Principal and our Attorneys we are in a position to meet the highest requirements and expectations of international clients. The decisive focus on international clients, which forms an integral part of our business philosophy, enabled us to establish a profound know-how base on international matters unmatched by law offices of comparable size and background. With our network of external consultants (auditors, tax advisors), we are well equipped to perform advisory services usually only found in much larger law offices. Our comparatively low overheads and flexibility enable us to provide our services on a competitive basis.
bunk-alliance has established a close cooperation with law offices in Italy, India, Poland, Slovakia, with auditors and tax advisory offices in Germany and Poland and various governmental agencies.
Phone: +49 6241 972 49 0
Fax: +49 6241 972 49 11
This release was published on openPR.
Permanent link to this press release:
Please set a link in the press area of your homepage to this press release on openPR. openPR disclaims liability for any content contained in this release.
You can edit or delete your press release German Local Trade Tax here
News-ID: 205222 • Views: 3673
More Releases from bunk-alliance Rechtsanwälte
PL: The envisaged repeal of special proceedings in commercial matters as a chanc …
The Polish cabinet accepted the long expected law proposal, which shall repeal commercial matters by changing the Civil Procedure Act. Currently, legal disputes between companies are decided in consideration of special regulations, which impose significant obligations on the parties already when filing the particulars of claims and which contain severe consequences in case of disregard, to the point of losing the proceedings, in particular the obligation to present all allegations
EU: Introduction of a unitary EU patent moves closer
On 26.06.2011, the EU Council of Ministers, on request of several delegations, released a general approach on the two draft regulations on the EU patent. Prior to this, the non-participating member states, Spain and Italy had filed a lawsuit with the European Court of Justice with regard to the Regulation implementing enhanced cooperation in the area of the creation of unitary patent protection. By the lawsuit, Spain and Italy turn
EU: Resolution order on the preliminary garnishment of accounts shall advance th …
According to the European Commission approximately one million of smaller companies face difficulties when trying to enforce and recover outstanding receivables abroad. Thus receivables amounting up to EUR 600 million are unnecessarily written off per year, only because companies don’t want to get themselves into costly and for them opaque litigations in other countries. According to its own statement, the European Commission wants to make it easier for citizens and
On the scope and effect of a decision rendered by a Community Trademark Court wi …
In October 2010 the Advocate General Pedro Cruz Villalón, gave his opinion, in which he commented on the geographical extension of a judgment rendered by the Community Trademark Courts with respect to the other member states of the European Union and how execution proceedings menaced by such a court, can be acknowledged and forced through. The current proceedings before the ECJ were let by a legal dispute between the French company
More Releases for German
German Maritime Security 2018, German Government Statement!
Despite all international and national efforts, piracy remains a serious peril for the international shipping industry. Especially in Asia (i.e. Chittagong/Bangladesh or on the Strait of Malacca), but also in South America (e.g. Bay of Santos/Brazil or in the port of Callao/Peru) robbery or piracy there has recurred in the recent past. At the West African coast the number of incidents had raised even by 50% with 66 incidents this
More German Investments Mean More German Translations
Why Language Continues to be an Obstacle for Investing in Germany Germany is one of the prime markets for foreign investments, with an estimated 4% of global direct investment making its way into the country. In fact, the world’s second richest man, Warren Buffett, who is only beaten to the top spot on the financial leaderboard by Microsoft Founder Bill Gates, believes Germany to be a ‘great market’, and confirms the
German Design Award 2015
German Design Council Awards a Special Mention to the LR 1000 Laboratory Reactor and Nominates the Tube Mill Staufen, Germany, February 23, 2015 — For the second time, a device produced by IKA® Werke has received the "Special mention for exceptional design quality" award from the German Design Council. The company was presented with the award in the "Excellent Product Design — Industry" category as part of the German Design Award 2015
Integral Launches German Bureau
Integral Launches German Bureau Appoints Suchit Manchanda as the Head of Operations January 4, 2010: Germany: Integral Fusion, a leading software services firm, has launched operations in Germany and announced the appointment of Suchit Manchanda as their Managing Director. The German bureau will be responsible for strategic business development in European Union organizations and client servicing. Suchit a world class MBA from Hochschule Nürnberg, Germany and a Masters in IT from Jamia
ISPA – German Masters 2008
Magdeburg – Over the long weekend of the 4. Mai more than 1.000 Skat players filled the Mittelland hall in Barleben. The tournaments of the 30. German Mastery and the 27. open International German Single Mastership were held by the International Skat Players Association, ISPA Germany. Patrons of the Games were the 1st Barleber Skat sports club e.V. and the Skat club \"Burger Ihleskater\", whose good organization together with the
German MBA Market
The German MBA-Market: An overview shows the MBA market in Germany contains both national players and also a number of overseas schools which have entered the market. In the late eighties, there were only 3-4 MBA providers in Germany, mostly from abroad. Between 1990 and 1995, this number increased to 35 providers and reached 100 by 2001. Today, students can choose from among 130 MBA-providers and over 250 MBA-programs in