Do I have to file a tax return in Germany?
If you carry out work in Germany on a long-term basis, you may have a permanent establishment in Germany for income tax purposes. In construction and assembly work, this is usually after a 12-month period has been exceeded, working for one customer on one site, or on multiple sites within a radius of up to 50 km. Should this situation arise, you are obliged to tax your income in Germany backwards from the date on which the contract in question started in Germany.
You may also have a permanent establishment if you buy or rent premises in Germany or if your employee or agent closes deals on your behalf in Germany.
Each case may be special and specific, so we recommend you consult us to find out whether you may have a permanent establishment for income tax purposes in that particular case. Should you be at risk of this, we will advise you on how to avoid the obligation if this is still possible or how to mitigate the consequences as much as possible.
From a quality point of view, it is advisable to have a German tax advisor handle both your accounting and your taxes. We will be happy to represent you on the basis of a power of attorney in cooperation with our local counsel in Germany.
Frequently asked questions
When is my company required to file a tax return in Germany?
If you carry out construction or assembly work in Germany and your work for the same customer at the same location exceeds 12 months, you will be obliged to file a tax return in Germany and be taxed on the income from the contract backwards from the start of the contract.
What is the amount of German income tax in %?
In Germany, in addition to income tax, there is also a trade tax, which varies depending on the location. In total, the tax burden can be as high as 25-30%.