The German Corporate Tax Rate

By July 13, 2007Economy

Following up on the post below about European corporate tax rates being reduced, here’s the facts about Germany’s recent cuts, from

German lawmakers have given their approval to a key corporate tax reform that will reduce the overall corporate tax burden on companies in Germany by almost 10%, placing the country in the middle of the European corporate tax league table.

The legislation, due to go into effect in 2008, was approved last week by the majority of the upper house of parliament, or Bundesrat, which represents the country’s 16 states and is controlled by Chancellor Angela Merkel’s grand coalition parties. The bill was passed in the lower house, or Bundestag, in May….[snip]

Germany currently has one of the highest corporate tax burdens in the world, and the business community has long called for rates to be reduced to help breathe life into Germany’s stagnating economy. The new law effectively cuts the corporate tax rate from the current 38.65% to 29.83%. This is to be done through a cut in the headline corporate tax rate paid by large companies to 12.5% from 25%, with regional corporate taxes, which average about 13%, remaining unchanged.

John Thain, head of the New York Stock Exchange’s new Euronext, also sees a big U.S. disadvantage building.

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