Tax Minimization in Germany

Tax Minimization in Germany

Updated on Saturday 21st August 2021

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Tax-Minimization-in-GermanyWhy is tax minimization used in Germany?

Tax minimization is used by both foreign and German companies conducting business operations. Tax minimization is often employed as a financial planning solution in order to avoid certain taxes. Our German law firm can draft viable financial plans in order to help clients maximize their incomes. Tax minimization is commonly known as tax avoidance or tax reduction.

Our lawyers in Germany can provide a wide range of tax planning solutions customized on the type of company and goals of each client.

Tax deductions in Germany

One of the most efficient tax minimization is provided by the German taxation system that offers many deductions that will help lower the taxes levied on income. Deductions are offered to those caring for underage children or students without any income. Insurance premiums, charitable donations or contributions made to certain German companies such as non-profit organizations can bring tax deductions. Social programs in Germany provide tax deductions from compensation. These programs are the retirement, unemployment, health insurance, illnesses or long term care. If an employer contributes to any of these programs, the payment of those contributions will not be considered taxable income. Foreign companies can also take advantage of the double tax agreements Germany has in order to benefit from deductions or even exemptions from the corporate tax.

Our law firm in Germany can offer details about the country’s taxation system and its benefits for local and foreign investors. We can help you if you are intereted in German VAT registration and the refunds you can obtain.

Investment incentives for foreign businessmen in Germany

Other than the tax deductions or exemption in Germany, the government provides many incentives for foreign investors that they can employ as tax minimization solutions. Among these we can remind the cash incentive programs that are offered to companies depending on their size and number of employees. Investment subsidies can also prove to be a good tax minimization solution as they are offered on new immovable properties, such as buildings. These types of subsidies are usually offered to small and medium size enterprises (SMEs). Germany also has a research and development program through which it offers grants to small and medium size enterprises investing in these areas.

You can contact our German lawyers for detailed information about current investment incentives for companies.