What is Corporate Tax?

Corporate tax is the tax a company pays on its profits — revenues minus deductible business expenses, depreciation, interest and (often) loss carry-forwards — with European rates ranging from 9% in Hungary to 30% in some German municipalities.

Statutory rates in 2026: Switzerland averages 14.6% combined federal+cantonal (Zug 11.85%, Geneva 14%, Bern 21%), Germany 30% combined (15% federal + 5.5% solidarity + ~14% Gewerbesteuer), France 25% standard, Italy 24% IRES + 3.9% IRAP regional.

The OECD Pillar Two global minimum tax of 15% applies from 2024 to multinational groups with consolidated revenue above EUR 750 million, limiting low-tax arbitrage. Many countries also impose digital services taxes, surcharges on banks, or sector-specific levies.

Effective tax rates are usually lower than statutory rates thanks to depreciation rules, R&D credits, participation exemptions on dividends and patent boxes (e.g. Switzerland's patent box can cut the effective rate on qualifying IP income by up to 90%). Group consolidation, intercompany financing and transfer pricing rules largely determine where profits actually land.

Example

A Zug-based holding company earning CHF 10 million in operating profit pays roughly CHF 1.19 million in combined corporate tax (11.85%) — versus CHF 3 million in Frankfurt or CHF 2.5 million in Paris.

Related terms

Transfer Pricing

Transfer pricing is the set of rules that determines the prices at which related companies within a multinational group charge each other for goods, services, intangibles and financing, requiring those prices to reflect what independent parties would have agreed (the 'arm's length principle').

Tax Haven

A tax haven is a jurisdiction that offers very low or zero taxation, strict financial secrecy and minimal substance requirements, used legally for international structuring and illegally for tax evasion and money laundering.

Withholding Tax

Withholding tax is an amount that the payer (employer, bank, custodian) deducts from a payment to a beneficiary and remits directly to the tax authority on the beneficiary's behalf, as a prepayment of the beneficiary's eventual tax bill.

Double Taxation

Double taxation occurs when the same income or capital is taxed twice — most commonly by two different countries claiming taxing rights — and is mitigated through bilateral tax treaties and domestic relief mechanisms.

Frequently asked questions

What is included in taxable profit?+

Accounting profit adjusted for tax-specific add-backs (non-deductible expenses, depreciation differences, tax-exempt income).

Can losses be carried forward?+

Yes in most jurisdictions: 7 years in Switzerland, unlimited in Germany (with caps), 10 years in France.

What is the global minimum tax?+

OECD Pillar Two: 15% top-up tax on large multinationals' low-taxed income, in force from 2024.