Search

Digitalize Global

For an LLC with a permanent establishment in the EU: Income tax or taxation as for a GmbH?

For an LLC with a permanent establishment in the EU: Income tax or taxation as for a GmbH?

If an owner of an LLC has a permanent establishment in the EU, taxation depends on how the LLC is classified for tax purposes in Germany.

Classification as a partnership

When the LLC e.g. in Germany is treated as a partnership, the owner must only Income tax on its share of profits from the LLC. Taxation then takes place in Germany in the same way as for a partnership (e.g. OHG or KG).

Classification as a corporation

However, if the LLC is classified as a corporation in Germany, it is subject to the Corporate income tax and trade tax like a Ltd.. In this case, the owner is taxed on distributions from the LLC, similar to a GmbH.

The tax classification of the LLC in Germany depends largely on the regulations in the Operating Agreement (Social contract). It is therefore important to structure this carefully and to coordinate it with the responsible tax office in order to avoid double taxation.

Was this useful?

Yes
No
Thank you for your feedback!
Disclaimer: Please note that the above dates, tax rates and regulations may change over time. Do not make any independent decisions without first consulting an expert for your individual situation. It is in your interest to always receive individual information from an experienced expert who knows your situation.

Leave a Reply

Your email address will not be published. Required fields are marked *

Leave the field below empty!

Similar topics
New