Germany Tax Rates 2026: Income Tax, Corporate Tax, VAT & Social Security

Germany Personal Income Tax Rates for 2026

German individual income tax is progressive. The statutory tariff is based on taxable income (zu versteuerndes Einkommen), not gross salary. For 2026, the basic tax-free allowance is €12,348 for a single taxpayer. The statutory formula then produces a progressive rate beginning at 14%; the 42% marginal rate applies from €69,879, while the 45% rate applies from €277,826.

For jointly assessed spouses or registered partners, the splitting method under German income-tax law generally applies by doubling the relevant thresholds in the tariff calculation, subject to eligibility for joint assessment.

Solidarity surcharge

The solidarity surcharge rate is 5.5% of its statutory assessment base. For individuals, a substantial exemption threshold means many taxpayers do not pay it. For 2026, the relevant income-tax threshold is €20,350 in ordinary cases and €40,700 in splitting cases, with a mitigation zone above the threshold.

Tax Residence and Liability in Germany

An individual with a residence or habitual abode in Germany is generally subject to unlimited German income-tax liability. A continuous stay of more than six months is generally treated as a habitual abode from the beginning of the stay, subject to statutory exceptions for certain temporary private visits.

Individuals who are neither resident nor habitually present in Germany can still be subject to limited tax liability on specified German-source income. Double-tax treaties can allocate taxing rights or reduce German tax in cross-border cases.

Germany Corporate Tax and Trade Tax in 2026

The statutory corporation tax (Körperschaftsteuer) rate is 15% of taxable income for assessment periods through 2027. Under legislation currently in force, the rate is scheduled to decline to 14% in 2028, 13% in 2029, 12% in 2030, 11% in 2031 and 10% from 2032.

A solidarity surcharge of 5.5% is generally calculated on corporation tax. Businesses may also be subject to municipal trade tax (Gewerbesteuer). The federal trade-tax measurement rate is 3.5%, and the resulting base amount is multiplied by the municipality's assessment rate (Hebesatz), which is at least 200% and varies by municipality.

Partnerships are generally tax-transparent for income/corporation-tax purposes: taxable results are attributed to the partners, while the business itself may remain liable to trade tax where the statutory conditions are met.

VAT (Umsatzsteuer) in Germany

The standard German VAT rate is 19%. A reduced rate of 7% applies to qualifying goods and services specified in section 12 of the VAT Act and its annexes. Exemptions and special regimes apply to certain transactions.

Capital Gains and Investment Income

Private investment income

Qualifying private capital income is generally subject to a special 25% income-tax rate, with the solidarity surcharge and, where applicable, church tax calculated in addition. Statutory exceptions can move particular investment income into the ordinary income-tax regime.

Private sales of assets

Private real-estate disposals can fall within the taxable private-sale regime when acquisition and disposal occur within ten years, subject to the statutory owner-occupation exception. For certain other private assets, the relevant period is generally one year; special rules apply where an asset is used as an income source. The annual exemption threshold for total gains from qualifying private sales is €1,000.

Corporate share disposals

For qualifying corporations, gains on the disposal of shares in another corporation are generally excluded from taxable income, but 5% of the gain is treated as non-deductible business expense, subject to the detailed conditions and exceptions in section 8b KStG.

Withholding Taxes in Germany

German employers generally withhold wage tax from employment income. Capital income subject to German withholding is generally withheld at 25% under the statutory capital-income rules, subject to exemptions, refund procedures and treaty relief.

For certain German-source payments to non-residents, section 50a EStG provides a 15% withholding rate on specified income such as rights and royalties, and 30% for certain supervisory-board remuneration. Double-tax treaties and EU-law relief may reduce or eliminate the domestic withholding tax if the required conditions and procedures are satisfied.

Germany Social Security Contributions in 2026

German social insurance is generally funded jointly by employers and employees, subject to contribution ceilings and special rules. The principal statutory rates in 2026 include the following:

Long-term care contribution reductions can apply to parents with multiple eligible children under age 25, and Saxony has a different employer/employee allocation. Contribution assessment ceilings also limit the earnings on which particular social-insurance contributions are charged.

Germany Tax Year, Returns and Advance Payments

The German tax year for individuals generally follows the calendar year. Under the normal statutory rule, annual tax returns relating to a calendar year are due no later than seven months after year-end unless a special rule applies. Different deadlines apply in advised cases and where the tax authority specifically requests an earlier filing.

Income-tax and corporation-tax advance payments may be assessed during the year. Employers remit wage tax through payroll, while self-employed persons and businesses commonly make advance payments based on assessed liabilities. Specific filing and payment obligations depend on the tax involved, taxpayer status and electronic filing requirements.