No. 169: Tax burden of German corporations of only 20 % – Fact or fake news?

A study by Janský (2019) commissioned by The GREENS/EFA concludes, based on individual financial statements prepared in accordance with German GAAP, that German corporations only pay around 20 % in taxes, instead of the legally required 30 %, as a result of tax planning. Our analysis shows this conclusion does not hold, nor does the claim that large and internationally operating companies have lower tax rates. With an improved sample, which omits partnerships as well as fully or partially tax-exempt corporations and accounts for regulations such as the (95%) tax exemption of investment income and group taxation, the average tax burden of German corporations is in the range of the statutory rate. This also applies to large and internationally operating corporations. However, these results do not indicate the absence of tax planning at the expense of German tax revenue. The finding just demonstrates that tax planning cannot be identified on the basis of individual financial statements.