Can freelancers also pay corporate tax?
June 30, 2024 | 50,00 EUR | answered by Benjamin Hohenadel
Dear tax advisor,
I have a question regarding corporate tax and hope that you can assist me. I am a freelancer and operate a small practice as a therapist for alternative medicine. In recent years, my business has grown significantly and I have now hired employees to handle the increasing demand.
I have heard that companies are required to pay corporate tax and I am wondering if this applies to freelancers like myself. So far, I have only paid income tax as a self-employed individual, but now that my business has expanded, I am concerned about potential tax liabilities that I may have overlooked.
Can freelancers like myself pay corporate tax? What are the requirements for freelancers to be subject to corporate tax? Are there any ways to avoid or minimize corporate tax?
I would greatly appreciate it if you could answer these questions for me, as I am worried about my tax situation and would like to plan ahead.
Thank you in advance for your assistance.
Best regards,
Verena Blumberg
Dear Mrs. Blumberg,
Thank you for your question regarding corporate tax. As a freelancer operating a small practice, it is understandable that you are concerned about potential tax obligations, especially now that your business has grown and you employ staff.
In Germany, corporate tax applies to corporations such as GmbHs or AGs, which typically generate profits and are required to pay taxes on them. Freelancers such as doctors, therapists, or lawyers, who usually operate as sole proprietors or in the form of a partnership such as a GbR, are not subject to corporate tax, but rather to income tax.
Income tax is calculated based on the company's profits and is determined by the individual tax rate of the entrepreneur. Unlike corporate tax, which taxes the company, income tax taxes the income of the entrepreneur.
However, there are cases in which freelancers may have to pay corporate tax under certain conditions. This may occur if a freelancer company is a corporation, such as a GmbH & Co. KG. In such cases, it may be advisable to seek advice from a tax advisor to clarify the tax situation and take advantage of possible tax benefits.
To avoid or minimize corporate tax, it is important to be aware of tax options and planning opportunities. A good tax advisor can help you optimize your tax situation and develop strategies to save on taxes.
I hope this information has been helpful and reassuring to you. If you have any further questions or require individual consultation, please feel free to contact me.
Best regards,
Benjamin Hohenadel
Tax Advisor
