Corporate Income Tax Falls to 10 Per Cent by 2032: Why the Value of Your GmbH Can Rise
IGCP Capital Partners · Published
Corporate income tax falls in steps from 15 to 10 per cent from 2028. What it means for after-tax cash flow, company value and the timing of a sale.
Corporate income tax in Germany falls by one percentage point every year from 2028, from 15 to 10 per cent in 2032. For a GmbH that means roughly 7.5 per cent more earnings after tax at the same profit; whether and by how much the company value rises depends, however, on valuation method, planning and discount rate. The law is enacted, not merely planned: it is published in the Federal Law Gazette 2025 I No. 161.
A robust company valuation combines taxes, discount rate and planning; our services page describes how we proceed. This article clarifies one building block: what the tax cut does to the value of a corporation and where it does not arrive. As of 08.10.2026; an overview, not tax advice.
What has been enacted?
The 2025 investment programme cuts corporate income tax in five steps and relieves retained profits of non-corporate businesses.
| Year | Corporate income tax (§ 23(1) KStG) | Retained-earnings rate (§ 34a EStG) |
|---|---|---|
| until 2027 | 15 % | 28.25 % |
| 2028 | 14 % | 27 % |
| 2029 | 13 % | 27 % |
| 2030 | 12 % | 26 % |
| 2031 | 11 % | 26 % |
| from 2032 | 10 % | 25 % |
The basis is the Act on a tax investment programme, BGBl. 2025 I No. 161, promulgated on 18.07.2025. In addition, declining-balance depreciation of up to 30 per cent applies to movable assets acquired after 30.06.2025 and before 01.01.2028.
How far does the total burden fall?
From just under 29.8 to 24.6 per cent when solidarity surcharge and trade tax are included. The calculation assumes a trade tax multiplier of 400 per cent (base rate 3.5 per cent, hence 14 per cent) and disregards add-backs and the distribution level.
| Year | Corporate income tax | Surcharge (5.5 % of it) | Trade tax | Total |
|---|---|---|---|---|
| until 2027 | 15.0 % | 0.825 % | 14.0 % | 29.825 % |
| 2028 | 14.0 % | 0.770 % | 14.0 % | 28.770 % |
| 2029 | 13.0 % | 0.715 % | 14.0 % | 27.715 % |
| 2030 | 12.0 % | 0.660 % | 14.0 % | 26.660 % |
| 2031 | 11.0 % | 0.605 % | 14.0 % | 25.605 % |
| from 2032 | 10.0 % | 0.550 % | 14.0 % | 24.550 % |
The relief is 5.275 percentage points on corporate income tax and surcharge. It does not depend on the multiplier; the total rate does. At a multiplier of 200 per cent it would be about 17.6 per cent in 2032, at 500 per cent about 28.1 per cent. The solidarity surcharge remains in this calculation; an end for corporations has not been decided.
Facing this situation yourself? IGCP advises owners independently — the initial conversation is free of charge, without obligation and strictly confidential.
Request a free initial consultation →What does this mean for company value?
A company's value follows the earnings buyers expect after tax. If the tax rate falls, those earnings rise.
An example at company level: on 100 euros of profit before tax, 70.18 euros remain today and 75.45 euros from 2032, other things being equal. That is 7.5 per cent more. With an unchanged discount rate, a value based on these earnings rises in the same proportion.
The actual effect is usually smaller. Four reasons:
- Phasing. The cut applies in steps from 2028 to 2032. The present value is below the end value; for the terminal value the 2032 rate counts.
- Debt. The higher the interest burden, the more tax is already reduced by the interest deduction; the cut has less effect.
- Add-backs. Add-backs for trade tax change the starting base.
- Shareholder level. Distributions remain subject to the flat-rate withholding tax. For shareholders the overall effect is smaller.
At the same time other parameters move the value. In September 2025 the IDW technical committee lowered the market risk premium to a range of 5.25 to 6.75 per cent; that lowers discount rates and raises appraisal values. How the rate is built up is shown in the article on the capitalisation rate. We found no documented statement from the IDW or auditors on by how many per cent the tax cut raises company values.
How do valuers deal with it?
In principle the law in force on the valuation date applies. This is what the draft revision of IDW standard S 1 (draft of November 2024) provides. Because the cut has been law since July 2025, it belongs in the planning from 2028, by our reading; we found no express IDW statement on it.
The simplified income-value method under the Valuation Act does not reflect the cut: it reduces operating profit by a flat 30 per cent for income taxes (§ 202(3) BewG). We found no adjustment. Anyone using the method for inheritance or gift tax thus continues to calculate with 30 per cent, although the actual burden falls to about 25 per cent by 2032.
For a sale: ask the valuer which tax rate is applied in the planning from 2028 and whether the phasing is reflected. A flat rate of 30 per cent across all years underestimates earnings after tax.
Who does not benefit?
Non-corporate businesses do not benefit directly. Corporate income tax applies only to corporations. Sole proprietorships and partnerships tax their profit at the income tax tariff, for which the government draft of the Income Tax Reform Act 2027 even provides a higher top rate of 47 per cent, see top tax rate on a company sale. Retained profits are relieved through § 34a EStG, from 28.25 to 25 per cent.
Since 2022, commercial partnerships can opt for corporate income tax under § 1a KStG; they are then taxed like a corporation. Whether that is worthwhile depends on withdrawal behaviour and sale plans and should be clarified with your tax advisor before a sale.
Is the cut certain?
Enacted yes, uncontested no. In 2026 politicians demanded bringing the cut forward: CSU leader Söder wanted it retroactively from 01.01.2026, the CDU in principle subject to budget constraints. After the May 2026 tax estimate, Finance Minister Klingbeil saw little room. We found no plans to postpone or scrap the cut; nor did we find reports newer than May 2026 on bringing it forward.
What does this mean for the timing of a sale?
The tax cut is rarely a reason to postpone the sale. A buyer already factors in the future tax rate today, and a higher price in two years is no promise. Anyone who wants to sell anyway should focus on earnings strength, dependence on the owner and process preparation; they move the price more. How a sale works is shown on our services page selling your company.
On legal form: for a GmbH that leaves profits in the company, the cut has the greatest effect. In a sale through a holding company the capital gain remains largely tax-free; the principle is explained in the article on selling through a holding company.
Does this also apply in Austria?
No, a different route applies there. From 2028 Austria introduces a tiered rate: 23 per cent up to one million euros of profit, 24 per cent above. At the same time the employer contribution to the Family Burden Equalisation Fund falls from 3.7 to 2.7 per cent. For most companies with profits below one million euros, the relief on payroll costs outweighs.
FAQ
How high is corporate income tax in 2032?
10 per cent. The rate falls by one point a year from 2028: 14 per cent in 2028, 13 per cent in 2029, 12 per cent in 2030, 11 per cent in 2031, 10 per cent from 2032 (§ 23(1) KStG).
Does the value of my GmbH rise automatically as a result?
Not automatically. Arithmetically, earnings after tax rise by about 7.5 per cent. How much of this arrives in the purchase price depends on valuation method, discount rate, planning and negotiation.
Does the cut also apply to partnerships?
Not directly. Retained profits are relieved through § 34a EStG. Those who opt for corporate income tax (§ 1a KStG) are taxed like a corporation.
Does the simplified income-value method reflect the cut?
No. It reduces operating profit by a flat 30 per cent for income taxes. We found no adjustment.
Will the cut be brought forward or scrapped?
Neither is decided at present. In 2026 there were demands to bring it forward; we found no plans to postpone or scrap it.
Should I postpone my sale because of the cut?
Rarely. Buyers already factor in the future rate. What matters for the price is earnings strength and preparation.
Sources: Act on a tax investment programme, BGBl. 2025 I No. 161 of 18.07.2025, as reported by KPMG and Bird & Bird; § 23 KStG, § 34a EStG, § 1a KStG, § 202 BewG (dejure.org, lxgesetze.de); IDW ES 1 n.F., draft of 07.11.2024; IDW technical committee, resolution of 16.09.2025, as reported by PSP Munich (08.12.2025); dpa-AFX (07.01.2026) and Haufe (08.01.2026) on the debate about bringing the cut forward; Tagesspiegel (07.05.2026) on the tax estimate; EY Austria and Grant Thornton Austria on the Budget Accompanying Act 2027-2028. Calculations: own calculation with a multiplier of 400 per cent. As of 08.10.2026. Overview, not legal or tax advice.
If you want to know how taxes, discount rate and planning affect the value of your company: the initial conversation with IGCP is free of charge, without obligation and strictly confidential. → igcp.at
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