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I live in Germany and run a software company. My company pays 31% taxes on its profits and when I transfer the remaining money to myself, I pay another 25% Taxe

by icode 15y ago

I live in Germany and run a software company. My company pays 31% taxes on its profits and when I transfer the remaining money to myself, I pay another 25% Taxes on that. So in the end I pay 48% taxes. Anybody in a similar situation? Any suggestions how to improve it?

aqrashik 15y ago
I'm not aware of the tax structure in Germany, but if you pay yourself a salary as an employee of your own company, shouldn't you should be paying corporate tax only on the portion left after you've deducted your salary from the profits?
- roel_v 15y ago
  Yes, and he's probably already doing that in part, but the total tax pressure doesn't go down all that much because income tax is high in the higher brackets, and they have low floors.
  - icode 15y ago
    I pay 42% on the money i pay myself as a salary. So salary has a slight advantage over paying out profits. But you cannot pay yourself as much salary as you like. You can only pay whats "reasonable" for a CEO and have to tax the rest as profit.
fauigerzigerk 15y ago
My first advice would be that Hacker News is not the best place to get tax advice specific to Germany, but I'm sure you already know that :-) You could register your company in Ireland and pay 12.5% corporation tax, pay yourself a low salary and make the company buy/rent things you need (a car, office + living space, etc). But I guess a German tax advisor would be a wonderful investment for you.
roel_v 15y ago
Yes, especially for software there are many ways to pay much less, but you'll need to find specialized people to do that and maybe be willing to make some trade offs. I'm not comfortable talking details, but search for companies who specialize in offshore companies and go talk to them - first talk is usually free. Also look across the borders (West, in your case - there are some hidden gems there).
maigret 15y ago
You just explained why Germany isn't bankrupt.

by icode 15y ago

aqrashik 15y ago

I'm not aware of the tax structure in Germany, but if you pay yourself a salary as an employee of your own company, shouldn't you should be paying corporate tax only on the portion left after you've deducted your salary from the profits?

roel_v 15y ago
Yes, and he's probably already doing that in part, but the total tax pressure doesn't go down all that much because income tax is high in the higher brackets, and they have low floors.
- icode 15y ago
  I pay 42% on the money i pay myself as a salary. So salary has a slight advantage over paying out profits. But you cannot pay yourself as much salary as you like. You can only pay whats "reasonable" for a CEO and have to tax the rest as profit.

fauigerzigerk 15y ago

My first advice would be that Hacker News is not the best place to get tax advice specific to Germany, but I'm sure you already know that :-) You could register your company in Ireland and pay 12.5% corporation tax, pay yourself a low salary and make the company buy/rent things you need (a car, office + living space, etc). But I guess a German tax advisor would be a wonderful investment for you.

roel_v 15y ago

Yes, especially for software there are many ways to pay much less, but you'll need to find specialized people to do that and maybe be willing to make some trade offs. I'm not comfortable talking details, but search for companies who specialize in offshore companies and go talk to them - first talk is usually free. Also look across the borders (West, in your case - there are some hidden gems there).

maigret 15y ago

You just explained why Germany isn't bankrupt.