Tax cuts for German businesses, from January 2008

I could not see a thread mentioning the recent approval of tax cuts for business here in Germany?

I like to have a little moan about stuff in Germany like everyone else, but I gotta say that the recent changes that will see company tax shift down from around 39% to about 29% is a very very positive and upbeat move by the current government. I think it is a great move, and will discourage companies from moving away from Germany. Kicks in from 1st Jan 2008.

There has been a big fuss this week in the UK because they have dropped the main corporate rate from 30% to 28%, but here in Germany the new rate will be around 28.9% I think, and in fact for those of us that live in the sticks (lower local taxes) I think the effective rate will be nearer 25%. The UK has also raised small business tax to 22% (from 19%).

I run a small business here, but was recently looking to move the main part of the business back over to the UK as the tax rate was gonna be 19% in the UK, compared to effectively 34% over here. But the recent changes at both ends mean it is 22% (in the UK) against about 25% here - so nothing in it anymore. I can imagine many much bigger businesses that were loooking at relocating to other countries will now stay here.

So more jobs in Germany!

the biggest problem with tax cuts is everyone moans about the loss of revenue but usually (not always) the lost in revenue is more than offset by increased revenues as Business invest more and are less inclined to move money around for tax reasons. The much misaligned Bush tax cuts instead of seeing a trillion dollar loss they, quite embarrassingly saw a double digit increase in tax revenue. Of course that isn't prevent the Dems now that they control congress from increasing the taxes. I should note that the reason for the increase in revenue is due to two things, one is the rich pay more in taxes and secondly is due to income inequality the rich are simply getting more money and thus paying more taxes.

It appears that I lied (or someone did!!!).

They are messing about with the figures, the rules, and generally just buggering about and shifting the goalposts.

Business tax should end up a bit lower here next year but only 2-3% by the sounds of things.

The "headline" rate changes from 25% to 19% but they are then jigging the rules on the local taxes - so end effect is crap from the
sounds of things.

Quick - man the escape pods.

Another update to the thread that no-one here gives a toss about anyway.

Got some calculations from a trade mag and in a nutshell the taxes will be down from 38.65% in 2007 to 29.83% in 2008 for general business.

Which whilst not perfect is better than a poke in the eye with a sharp stick. UK rate is 21% for small business next year.

Very interesting, still ridiculously high but maybe by the time I'm 70 it will have reached some normal level.

Johnny English,

I read once an Article in Spiegel about how many Big German companies get lots of tax breaks (so there effective tax rate is actually very low) and also some industries get subsidies for all sorts of nonsense. As far as I can see the German Business Tax system is weighted to those that have good lawyers or good lobbyists. So I feel sorry for the poor small firms trying to ply their trade...

Yeah I think the big guys get lots of dodgy help to keep them here. But even smaller businesses can "defer" tax to a later date by setting cash aside for "future projects". My company is therefore planning a manned spaceflight to the newly discovered "Planet KTM" and will be setting aside all future profits in pursuit of this worthy venture. We expect to be spending ever larger amounts on tinfoil spacesuits, protective rubberwear and those little packets of dryfood in a bag (currently in lengthy negotiations with CuppaSoup and PotNoodle).