FCTO Income Tax Brackets in Germany for 2024

One of Europe’s largest economies, and the world’s fourth largest, Germany is an attractive business and investment location. It remains a first-choice investment destination for international investors. Individual taxpayers are assigned a unique 11-digit number (IDNo) which is used in tax assessment matters. The tax system in Germany is administered by the official tax body, the Federal Central Tax Office (Bundeszentralamt für Steuern).

The Income Tax Act (Einkommensteuergesetz, EStG) provides guidance and support in the form of income tax tables for individuals and businesses. Taxpayers must familiarize themselves with these tax tables and the corresponding income tax brackets and income tax rates, for effective tax planning and to remain compliant with the tax laws of Germany.

Here you will learn about:

• headline tax rates
• personal income tax (PIT) rates
• trade income tax rates for individuals
• corporate income tax (CIT) rates
• capital gains tax (CGT) rates
• withholding tax rates for residents and non-residents
• value-added tax (VAT) rates

Headline Tax Rates in Germany

Personal Income Tax (PIT) Brackets for Individuals in Germany for 2024

Taxes are usually administered by the individual federal states. Resident individuals are taxed on their worldwide income whereas non-resident individuals are taxed on German-sourced income. Taxable income may be reduced by allowable deductions including lump-sum deductions. 

No local or state income taxes are levied in Germany.

Surcharges on Personal Income Tax

There is a 5.5% solidarity surcharge tax imposed on all individual income taxes.

A church tax acts as a surcharge on income tax for members of officially recognised churches. Church tax is levied at a rate of either 8% or 9% depending on the state where the individual resides.

Trade Income Tax for Individuals

A trade income tax for individuals is levied on business income. However, a tax-free amount of EUR$24,500 is considered for individuals and partnerships.

Personal Income Tax Due Dates

Corporate Income Tax (CIT) Rates in Germany for 2024

The total corporate income tax (CIT) in Germany is 15.825% comprising the standard CIT (at a rate of 15%) and a solidarity surcharge (at a rate of 5.5% of the corporate income tax). The trade tax rate ranges from 8.75% to 20.3% comprising a base trade tax at a rate of 3.5% and a varying municipal tax rate depending on the location of the business.

Companies based in Germany pay CIT on globally generated income whereas those not based in Germany are only liable to corporate income tax on income generated in Germany. The latter may be achieved through a permanent establishment (PE), dividends or licences.

Corporate Income Tax Due Dates

Capital Gains Tax (CGT) in Germany

Withholding Tax Rates for Residents and Non-Residents in Germany

In general, withholding tax (WHT) applies to both residents and non-residents and there are varying rates based on the type of income; this may include dividends, interest and royalties. For example, interest paid by banks to a resident is subject to WHT. Additionally, a 5.5% solidarity surcharge on tax is due. As Germany is signatory to multiple double taxation treaties (DTTs), the WHT rate may vary and the taxpayer may benefit from the DTTs in place.

Value-Added Tax Rates in Germany