Tax system in Germany
Germany taxes resident individuals on worldwide income and resident companies on worldwide profits. In practice, wage tax withholding, capital income withholding and annual assessments do much of the heavy lifting.
Personal income tax is progressive from 0% to 45% in 2026, with a EUR 12,348 basic allowance, a 5.5% solidarity surcharge on many liabilities and church tax in participating states.
Companies generally face 15% corporation tax plus solidarity surcharge and local trade tax. Germany also applies 19% VAT, 7% reduced VAT on many goods and services, payroll social security contributions, inheritance and gift tax, and real estate transfer tax.
Tax rates at a glance
- Income tax
- 0% - 45%Progressive
- Wealth tax
- 0%
- Inheritance tax
- 7% - 50%
- Capital gains tax
- 25%
- Corporate tax
- 15.825% + trade tax
- Dividend tax
- 25% + surcharge
- VAT
- 19% / 7%
Who benefits most
These profiles tend to benefit most when the rules match their real residence, payroll and business setup.
EmployeesExpatsInvestorsFoundersCross-border groups
Watch out for
- Germany is not a low-tax jurisdiction. Social security, trade tax, solidarity surcharge and church tax can materially increase the real burden.
- No wealth tax does not mean no property-related taxes. Real estate transfer tax, annual property tax and inheritance and gift tax still apply.
- The enacted Investment Booster Act reduces corporation tax by one percentage point annually from 2028, reaching 10% from 2032. Current trade-tax treatment remains local.
- Cross-border workers, founders and shareholders should check treaty relief, withholding tax and CFC rules before assuming German residency is the only tax issue.
Frequently asked questions
Is Germany a high-tax country?
Yes. Germany has progressive income tax, local trade tax, VAT, payroll social security and withholding taxes on capital income. The system is comprehensive rather than simple.
Does Germany have a wealth tax?
No. Germany currently does not levy a net wealth tax, although the idea is often debated politically.
Which taxes matter most in Germany?
The main ones are income tax, trade tax, corporation tax, VAT, dividend withholding tax, capital gains tax, inheritance and gift tax, and payroll social security.