Resident corporations are classifed as commercial businesses
(Gewerbebetriebe) by virtue of their legal form under civil law
and therefore all of their income constitutes commercial busi-
ness income (gewerbliche Einkünfte), irrespective of its source.
Profits are subject to a corporate income tax rate of 15% at the
level of the corporation plus a solidarity surcharge (Solidaritäts-
zuschlag) of 5.5%. The tax rate for corporations of 15% is
therefore increased by the solidarity surcharge to 15.825% (15%
plus 5.5% of 15%). The solidarity surcharge is levied on, among
other things, the assessed amount of corporate income taxes,
corporate income tax prepayments, and withholding taxes.
Furthermore, profts from commercial business activity are
subject to trade tax. Trade tax (Gewerbesteuer) is based on
federal law but is levied by local municipalities on a corporation’s
trade income. The trade income is multiplied by a basic tax rate
(Steuermesszahl) of 3.5% to arrive at the so-called base amount
(Steuermessbetrag). The relevant multiplier (Hebesatz) for each
local municipality is then applied to the base amount. These
multipliers typically range between 300 – 490%, i.e. A factor of
3.0 to 4.9, yielding a tax rate of 10.5 – 17.15%.