Tax in Germany: VAT, income tax, company tax, capital gains

Umsatzsteuer (USt) in Germany

EU value-added system: output VAT less input VAT, with intra-EU reverse charge for cross-border B2B.

Standard rate

19%

Local name

Umsatzsteuer (USt) — Value Added Tax

Type

VAT

Reduced rates

7%

Registration threshold

EUR 22,000 (small-business scheme)

Filing

Monthly or quarterly

Authority

Bundeszentralamt für Steuern

Current rate since

1 January 2000

Company tax in Germany

The headline corporate income tax rate is 15%. In effect since 1 January 2026.

KStG § 23: 15% for assessment periods up to 2027, then enacted cuts of one point a year to 10% from 2032. Federal corporation tax 15% for assessment periods up to 2027, then enacted cuts: 14% (2028), 13% (2029), 12% (2030), 11% (2031), 10% from 2032. Solidarity surcharge 5.5% of CIT (15% x 1.055 = 15.825%). Municipal trade tax (Gewerbesteuer) additional, 3.5% base rate x municipal multiplier (OECD sub-central 2026: 14.31%; OECD combined 30.13%). No small-business CIT rate. Germany applies the Minimum Tax Act (MinStG, IIR/QDMTT) from 2024 - not read this session. | Cross-check: OECD 2026: central statutory CIT 15.825%, combined (central+sub-central) 30.133026%; sub-central CIT 14.308026%; central rate excluding surtax 15%

Germany company tax calculator →

Did you know? Germany tax facts

• Germany taxed tampons and sanitary products at the full 19% rate while items like caviar, truffles and cut flowers enjoyed the reduced 7% rate.

  The gap stood until a 2019 Bundestag vote cut sanitary products to 7%, effective 1 January 2020. Cut flowers, truffles and caviar all sit in the reduced-rate Annex 2 (Anlage 2) to the German VAT Act.

  Source: iamexpat.de ↗

• To protest the tampon tax, German startup The Female Company sold "The Tampon Book" — tampons hidden inside a book — exploiting the 7% rate on books, and the first print run sold out in a day.

  Books qualified for the reduced 7% rate while menstrual products were taxed at 19%; the first print run sold out in a day and the second within a week. The stunt helped pressure the 2019 reform.

  Source: iamexpat.de ↗

• A cappuccino made with cow's milk is taxed at 7% in Germany, but the identical drink made with oat or soy milk is taxed at 19%.

  German VAT gives the reduced rate to drinks that are at least ~75% animal milk (e.g. a cappuccino at 75-80% milk). Plant 'milks' aren't legally milk under EU rules protecting the term, so they fall to the 19% standard rate.

  Source: eClear ↗

• The European Court of Justice ruled in 2011 that Germany broke EU law by giving racehorses and saddle horses the same reduced VAT rate as farm animals destined for the dinner plate.

  In Case C-453/09 (decided 12 May 2011) the Court held the reduced rate applies only to live animals 'normally intended' for food or feed, forcing Germany to charge full VAT on sport and leisure horses.

  Source: VATupdate ↗

• Germany's very first general turnover tax in 1918 was a wartime levy of just 0.5% — the standard rate has since climbed to 19%.

  Introduced amid World War I, the rate reached 4% by 1951 before the 1968 switch to modern VAT at 10%, reaching today's 19% in 2007.

  Source: German Federal Ministry of Finance (BMF) ↗

• German church members pay a church tax of 8% or 9% of their income tax — 8% in Bavaria and Baden-Württemberg, 9% elsewhere — and the way out is a declaration to the civil authorities, not to the church.

  Wikipedia: taxpayers pay 'an amount equal to 8% in Bavaria and Baden-Württemberg, and 9% in the rest of the country, of their income tax'; the basis is Article 137 of the 1919 Weimar Constitution, carried into Article 140 of the 1949 Basic Law; the tax raised 'about €13.1 billion in 2022', roughly 70% of church revenues.

  Source: Wikipedia — Church tax · checked 10 October 2026 ↗

• Germany's 'Soli' began in 1991 as a temporary 7.5% surcharge on income tax, lapsed in 1993–94, returned in 1995 to pay for reunification and fell to 5.5% in 1998 — and since 2021 about 90% of former payers owe nothing.

  German Wikipedia: in 1991–92 the surcharge applied for only half of each year (effectively 3.75%), justified by Gulf War costs and 'zusätzliche Aufgaben in den neuen Bundesländern'; reintroduced without time limit in 1995 for the 'Kosten der deutschen Einheit'; 5.5% since 1998; from 2021 a Freigrenze with a sliding zone relieved 'rund 90 % aller Soli-Zahler'.

  Source: Wikipedia (DE) — Solidaritätszuschlag · checked 10 October 2026 ↗

• Above the tax-free Grundfreibetrag, Germany's marginal income tax rate rises progressively from 14% to 42%, with a 45% top rate reserved for very high incomes.

  Wikipedia: 'A basic personal allowance (Grundfreibetrag) is tax-free. Above it, marginal tax rates rise progressively from 14% to 42%, with a top rate of 45% for very high incomes.' The wage-tax class affects withholding during the year 'but does not change the underlying annual income-tax tariff'.

  Source: Wikipedia — Taxation in Germany · checked 10 October 2026 ↗

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