Definition of corporation and scope of tax liability
Corporations are legally capable associations based on the membership of persons; they are organised on a membership basis and exist independent of the change of the individual members. The legal form corporation is a legal person, whose "body" exists of individual natural or other legal persons.
The corporations covered by the German corporation tax law are, for example, the joint stock company (Aktiengesellschaft, AG), the limited liability company (Gesellschaft mit beschränkter Haftung, GmbH) or the association (Verein, e.V.). Partnerships (e.g. general partnerships, Offene Handelsgesellschaften, OHG) are, however, not subject to corporation tax; the individual partner is subject to income tax for his income.
The corporation tax law differentiates, just like the income tax act, between unlimited and limited tax liability. The unlimited corporation tax liability covers all income. Unlimited tax liability applies to corporations (e.g. joint stock companies and associations), associations of persons (e.g. cooperatives) and funds or estates (e.g. foundations), which have either their management or registered office within the country.
Corporations, associations of persons and funds which have neither their management nor their registered office within the country have a limited tax liability with their domestic income.
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