From 1.1.2007 ,in most cases, value added tax is 19%.
There is a reduced rate of 7% that relates mainly to food and agricultural products.
Value added tax is imposed on assets and services in Germany as well as on imports into Germany.
Overseas exports are exempt from value added tax.
Value added tax reports must be submitted monthly.
There are special provisions for small businesses.
Inheritance and Gifts Tax:
A tax applies in Germany to both inheritances and gifts and the application of the taxation principles is similar in both cases.
When either the person making the gift / the testator or the recipient of the gift / the heir is a German resident, the tax applies also to assets that are overseas.
When neither the person making the gift / the testator or the recipient of the gift / the heir is a German resident, the tax applies only to assets that are located in Germany.
When tax is imposed in a foreign country, the tax paid overseas will be deducted from the tax payable in Germany. For these purposes a Double Taxation Prevention Treaty has been signed with a number of countries, among them, the United States of America, Switzerland, Austria and others.
As a general rule, recipients of gifts / inheritances are divided into three groups.
Group 1 - a spouse, children.
Group 2 - parents and grandchildren.
Group 3 - all others.
The tax rates vary according to the above groups and also depend on the value of the asset. The tax payable fluctuates between 7% and 50%.
There are certain exemptions that depend on the degree of family kinship.
Real Estate Transfer Tax:
The tax is imposed on real estate that is located in Germany.
The taxes are transferred to the local authority in which the property is located.
The tax is also imposed when buying at least 95% shares of a company owning real estate.
