Mr. Herbener, do companies in Germany pay too much tax in your opinion?

© Ralf Herbener

Germany needs a capable state and offers companies a lot: such as good infrastructure, a fantastic research landscape, and the enforceability of legal claims. However, our country is not alone in this regard; it is similar in a significant part of Europe. Therefore, tax rates must also be considered a factor of location.

Germany is always among the top three internationally in terms of taxation. This is also ensured by a German peculiarity: the trade tax. Many foreign investors do not know or understand it at all. It is a domestic rarity, so to speak. And it is a problem: Even if no taxes are increased at the federal level, the tax burden for companies increases year by year. Municipalities are forced by the debt brake to generate higher revenues. Often, the only option left is to raise the trade tax multiplier. The nominal tax burden of 30 percent for corporations is reached with a 400 percent multiplier. Most cities and municipalities are significantly above this.

Now a global minimum tax is to come. Will this help Germany as a location?

I hardly think so. Quite the opposite: The endeavor could partly lead to an actual tax increase, even for German companies – because it will lead to double taxation in many places. The minimum tax is effectively a substance tax, because losses are also taxed. Exporting nation Germany will suffer from this, I fear.

In many countries, tax policy is understood as competition policy. German politics have a rather regulatory approach. This may be understandable in parts, but in international competition it is increasingly becoming a burden – regardless of whether a minimum tax is introduced or not.

If taxes for companies are an important factor: Would more people start a company if there were tax exemptions for the first years?

Newly founded companies usually have high start-up losses. Taxes are usually not the problem in the first years. Instead, it's about a lack of liquidity and excessive bureaucratic requirements. For many businesses, new and existing, documentation and reporting obligations are becoming an ever greater problem. The regulations are becoming more diverse and numerous.

If I could wish for something for the new legislative period, it would certainly be a reduction in bureaucracy for companies. In tax policy, stable framework conditions would help, i.e., no tax increases. They would stall the just-started economic engine again.

And otherwise? Next year we will celebrate 17 years of "No corporate tax reform." From my point of view, there is an urgent need for action here. And: In Germany, taxation is actually based on the principle of performance – and not on political ideologies. Please let it stay that way.