The choice of legal form is a deciding factor.
Germany’s tax legislation is quite complicated, especially the regulations concerning the determination of taxable income. The choice of legal form is a matter of great consequence. However, tax issues are not the only factor that needs to be taken into consideration. Commercial and corporate legislation, and even family law or inheritance law, may be relevant as well.
The Federal Central Tax Office operates a tax information centre which also provides support for foreign investors. The centre answers tax-related questions foreign investors are faced with prior to an involvement in Germany. A general overview is available at www.germantaxes.info. Foreign investors can also access detailed information on specific issues through this site.