What is Körperschaftsteuer?

Körperschaftsteuer is the corporate income tax levied on the taxable profits of German legal entities — primarily GmbHs (limited liability companies), AGs (public limited companies), and other corporate forms. Unlike Einkommensteuer (personal income tax), KSt is a flat rate and does not vary by profit level.\n\n**Rate structure**\nThe KSt rate is a flat 15% on taxable profit. On top of this, a Solidaritätszuschlag (solidarity surcharge) of 5.5% is levied on the KSt amount itself — not on the profit. This gives an effective combined rate of 15.825%. The SolZ was originally introduced to fund German reunification and remains in force for corporations.\n\n**Combined tax burden for GmbHs**\nA GmbH's actual total tax burden is KSt + SolZ + Gewerbesteuer. Gewerbesteuer varies by municipality (see Gewerbesteuer entry), but typically adds 14–17% on top. The combined effective rate for most German GmbHs is therefore 29–33% on business profits. This compares broadly to the UK's 25% main rate or Ireland's 12.5% — Germany is on the higher end within the EU.\n\n**Taxable profit calculation**\nGermany follows a modified commercial balance sheet approach (Steuerbilanz). The commercial accounts (Handelsbilanz under HGB rules) are adjusted to produce the tax balance sheet. Key adjustments include:\n- Non-deductible Gewerbesteuer payments (GewSt is not deductible for KSt purposes since 2008)\n- Non-deductible penalties and fines\n- Half of supervisory board remuneration\n- Transfer pricing adjustments for intercompany transactions\n\n**Advance payments**\nKSt is paid in quarterly advance instalments on 10 March, 10 June, 10 September, and 10 December. Each instalment is one quarter of the prior year's tax liability. After filing the annual return, the Finanzamt issues a final assessment and any underpayment is settled (or overpayment refunded).\n\n**Filing**\nThe Körperschaftsteuererklärung (KSt return) is filed electronically via ELSTER (the German tax portal). The standard deadline is 31 July of the year following the tax year — so for 2025, the deadline is 31 July 2026. If a Steuerberater (licensed tax advisor) handles the filing, the deadline is extended to the last day of February of the following year (28 February 2027 for 2025).\n\n**Loss treatment**\nLosses can be carried back one year (up to €10 million) and carried forward indefinitely. However, the Mindestbesteuerung rule means that only 60% of taxable profit above €1 million can be offset by brought-forward losses in any given year.\n\n**Dividend distributions**\nWhen a GmbH pays dividends to its shareholders, withholding tax (Kapitalertragsteuer) of 25% + 5.5% SolZ is applied. For corporate shareholders, 95% of inter-company dividends are tax-exempt under the participation exemption, with only 5% treated as non-deductible expenses.