We were very excited to have legal experts come into Migration Hub Berlin to offer a group session on tax, civil and corporate issues.
Here are a few points that were touched upon and are of use! Please verify all these facts before taking them onboard.
Types of German Companies
- Every tax payer has to submit taxes annually
- If income does not exceed 9000 euros in a year then you do not need to submit your tax declaration
- All companies need to register with finanzamt (corporate and national taxes) – tax office always at location of headquarters of company. Once registered then tax office (finanzamt) send a form.
- Have time until 31st July for the last year to submit the tax declaration but if you see that you cannot make the deadline, then you can ask for an extension before the deadline. If you have a tax advisor then you have until December.
- If you do not make the deadline or don’t apply for extension then you get a fine.
- The tax authorities website has good advice for teaching you how to submit your taxes.
- A tax advisor cost depends on the work he has to do. Usually 140 euros an hour but if simpler than usually less.
- ELSTER is software you use to submit your taxes if you are submitting them alone.
- Toytowngermany.com translated the tax papers into English
What types of taxes do you have in Germany?
- Valued added tax (VAT)/ UmsatzSteuer (7-19%) only paid by end user of product or service. VAT rate is not optional but depends on what you are selling.VAT is paid for a service (not for a donation/investment…). Normally 19% but some for instances eg books are 7%. Milk is 7% but soya milk is 19%.
- Wage tax (lohnsteuer) 14-42% – Only relevant to employees. The employer deducts the wage tax from the employees salary and gives it to the tax. If annual income exceeds 260,500euros then you pay 42%.
- Personal income tax (14-42%)
- Corporate income tax (15,425)
- You need steuernummer of customer or business
- If over 250 euros you need to describe good/service, VAT, name address of companies, bank account number, time and delivery date, turnover, vat tax rate, if agreed on discount than that included, tax number
- In general if you pay VAT then you need to invoice a good or service even under 250 euros
- Do not need to invoice donations. But for under 200 euros or 200 plus euros donations you needs to submit an invoice donation sheet. (spendenbeschinigung)
NB. Only the terms of freelancer and employee is relevant to taxation. But the terms of founder or entrepreneur is relevant to corporate law.
Church Tax is only relevant for personal tax.