corporation tax
noun · Körperschaftsteuer
Körperschaftsteuer is right but partial: at fifteen per cent to 2027 and falling to ten from 2032, § 23 KStG, it is only one layer of the German corporate burden, which adds the Solidaritätszuschlag and the municipal Gewerbesteuer to roughly thirty per cent. It falls on Körperschaften, § 1 KStG; a partnership is taxed transparently unless it opts in, § 1a KStG.
Which translation, when
Why
Corporation tax maps to Körperschaftsteuer, and the trap is arithmetic rather than lexical. The Körperschaftsteuer of § 23 KStG is fifteen per cent of taxable income for now, but the 2025 Investitionssofortprogramm rewrote the rate into a descending staircase: fifteen through 2027, then fourteen, thirteen, twelve, eleven and ten per cent from 2032, so any figure has to carry its year. That headline is not the burden. On top of the Körperschaftsteuer sits the Solidaritätszuschlag at 5.5 per cent of it, and beside it the municipal Gewerbesteuer, a separate trade tax whose local Hebesatz adds roughly fourteen to seventeen points and which is covered under trade tax; together they take a corporate profit to about thirty per cent today. An English corporation-tax rate compared with the bare fifteen therefore compares unlike things. The base also differs by taxpayer: Körperschaftsteuer falls on Körperschaften, § 1 KStG, chiefly the Kapitalgesellschaften, while a Personengesellschaft is transparent and its partners are taxed individually, § 15 Abs. 1 Nr. 2 EStG, unless it elects into corporate taxation under the Optionsmodell of § 1a KStG. So corporation tax is the right word for the wrong number unless the trade tax and the surcharge are in the frame.
Typical mistakes
- The bare Körperschaftsteuer understates the German corporate burden: add the Solidaritätszuschlag and, above all, the municipal Gewerbesteuer covered under trade tax, and the real load is near thirty per cent, not fifteen.
- The rate now carries a date, § 23 KStG: fifteen per cent through 2027 and then falling to ten from 2032, so a rate stated without its year will soon be wrong.
- Körperschaftsteuer is a tax on Körperschaften, § 1 KStG; a partnership pays it only if it elects under § 1a KStG, and otherwise its partners are taxed transparently, § 15 Abs. 1 Nr. 2 EStG, so calling a partnership’s tax Körperschaftsteuer misdescribes the structure.
What matters
Financial-model and warranty lines that carry a single corporation-tax rate need the German build-up spelled out, because Körperschaftsteuer, § 23 KStG, is only the base; the Solidaritätszuschlag and the Gewerbesteuer under trade tax take the figure to about thirty per cent. Group papers that assume a partnership is taxed like a company have to check for the Optionsmodell election, § 1a KStG, before that holds.
What the machine misses
Corporation tax lands on Körperschaftsteuer correctly, which is why the number beside it misleads. The machine keeps the German fifteen per cent of § 23 KStG next to an English rate as though they were comparable, when the German corporate load adds the Solidaritätszuschlag and the municipal Gewerbesteuer to near thirty, and it ignores that § 23 KStG now steps down to ten per cent from 2032. It also treats a partnership’s tax as corporation tax, missing that this holds only on an election under § 1a KStG.
Examples
| liable to corporation tax | körperschaftsteuerpflichtig |
| the corporation tax rate | der Körperschaftsteuersatz |
| profits chargeable to corporation tax | das zu versteuernde Einkommen |
| corporation tax and trade tax | Körperschaftsteuer und Gewerbesteuer |
More notes on these sections
trade tax Gewerbesteuer
income tax Einkommensteuer