INCOME TAX

CIA - 3
Comparative Study of Income Tax in 3
Different Countries

PREPARED BY
ARCHIT JAIN
1411406
5 BBA A
1

PARTICULARS

FRANCE

GERMANY

GEORGIA

TAX
STRUCTURE

Regressive.

Progressive.

Progressive

Industry and
employeremployee based.

3 tier

Work based.
2 tier

2- Tier
INCIDENCE OF
TAXATION

A person is
deemed a resident
of France by
fulfilling any of
the following
criteria.

A resident of
Germany
generally refers to
an individual who
has a domicile in
Germany or
spends more than
The
6 consecutive
individual
months in
maintains a Germany
permanent
(habitual place of
household
abode). A
in France.
domicile is a
home or dwelling
The
individuals owned by, or
main place rented to, the
of abode is taxpayer who has
full control over
in France.
the property.
Most of the Domicile is
individuals determined by
business
fact, not by the
activities
intention of the
are
taxpayer.
performed
A non-resident of
in France.
Germany is
The center generally
of the
someone who
individuals spends less than 6
economic
consecutive
interests is
months in

Income tax payers

are resident and nonresident individuals
of Georgia.
Residency is defined
by the Tax Code of
Georgia (TCG) as
follows:

During the
entire current
tax year, an
individual
shall be
recognized as
a resident of
Georgia if
he/she was
actually
present in the
territory of
Georgia for
183 days or
more in any
continuous
calendar 12month period
ending in this
tax year, or
was in the
Georgian state
service abroad
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in France.

Germany. The
general rule is that
a person who is a
resident of
Germany is
assessable on the
individuals
worldwide
income. Nonresidents are
generally
assessable on
income derived
from German
sources. Extended
business travelers
are likely to be
considered nonresidents of
Germany for tax
purposes, unless
they stay in
Germany for more
than 6 months in a
row (brief
interruptions such
as home trips over
the weekend or
vacations are
disregarded).

during the tax

year.

Actually
present shall
be considered
as the time of
actual
presence in
the territory of
Georgia
during which
a person has
been in the
territory of
Georgia, as
well as the
time period
which he/she
has spent
outside the
territory of
Georgia
specifically
for the
purposes of
medical
treatment,
vacation,
business trip,
or study.
Time during
which a
person was in
Georgia is not
considered as
a time of
actual
presence on
the territory of
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Georgia if
he/she stayed:
- as a person
having
diplomatic or
consulate
status or as a
family
member of
such person.

as a staff
member of an
international
organization
under
Georgian
international
agreements,
or as a person
who is in the
state service
of a foreign
country,
and/or a
family
member of
such a person,
except
citizens of
Georgia.

exclusively
for moving
from one
foreign
country to
another
through the
territory of
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Georgia

for medical
treatment or
resting
purposes.

VARIOUS
TAXES
CHARGED

Corporate Tax,
Income tax,
Payroll Tax,
VAT/Sales Tax

Corporate Tax,
Income tax,
Payroll Tax,
VAT/Sales Tax

Corporate Tax,
Income tax,
VAT/Sales Tax

TAX TO GDP
RATIO

18.6 %

10.8 %

24.1 %

15 %

5.95 %

AVERAGE RATE 37%

OF TAX

FRANCE: A 3.3 percent social contribution is levied on the part of the corporate income tax that exceeds
EUR 763,000, resulting in an overall maximum tax rate of 34.43 percent. In addition, a
temporary 10.7 percent surtax is levied on companies with a turnover over EUR 250 million.
The tax is calculated on the gross CIT amount liability but before the application of any tax
credit (such as R&D credit or foreign tax credit). This temporary surtax, which brings the overall
maximum tax rate to 38 percent, is expected to apply to financial years (closed) from 31
December 2011 until financial years (closed) on 30 December 2016.
Specific categories of income can benefit from a reduced corporate tax rate under conditions. In
particular, licensing fees relating to certain IP rights can benefit from a 15 percent corporate tax
rate (respectively 15.5 percent or 17.10 percent taking into account the above two surtaxes).
Small and medium size companies with a turnover of EUR 7.63 million or less owned at least 75
percent by individuals (or owned by companies meeting the same conditions) are subject to a
corporate income tax rate of 15 percent. This reduced rate applies to taxable profits up to EUR

38,120. These small and medium size companies are not subject to the abovementioned social
contribution and temporary surtax.

GERMANY: The corporate tax rate is 29.72%. The overall income tax rate for corporations includes
corporate income tax at a rate of 15%, solidarity surcharge at a rate of 0.825% (5.5% of the
corporate income tax), and local trade tax. The local trade tax generally varies between 7% and
17.15%, assuming a municipality multiplier (Hebesatz) ranging normally from 200% to 490%
(the average multiplier for 2014 was 397%). The local trade tax is not deductible as a business
expense.

GEORGIA: The Corporate Income Tax is calculated on an annual basis; the rate of 15% is applied to the
taxable profit. The taxable profit is defined as the difference between the gross income and the
relevant deductions stipulated by the Tax Code of Georgia
Tax rates
For the year ending 31 December 2016, the following rates apply for various types of income:
Residents
Type of income

Tax
Rate

Taxable through withholding

(W)/ Filing tax return (R)

Employment

20%

Georgian

5%

Dividends from Georgian

source

5%

Taxable
income
of
entrepreneur individuals

20%

Interest
source

from

Royalty

20%

Capital gains

20% /
5%

5%

W/R

Rental
income
residential space

from

Non-residents
Type of income

Tax
Rate

Taxable
through
withholding
(W)/
Filing tax return(R)

Employment

20%

Dividends

5%

Interest

5%

Royalty

5%

10%

20% /
5%

International
traffic,
telecommunication

international

Rent

Other payments (except for sale of 10%

property)

Service payments (including interest

and royalty) to a nonresident in the list
of offshore countries

15%

Taxable income of individuals through

his/her PE

20%

REFERENCES: https://home.kpmg.com/xx/en/home/services/tax/tax-tools-and-resources/tax-ratesonline/corporate-tax-rates-table.html
https://www.french-property.com/guides/france/finance-taxation/taxation/calculation-taxliability/rates/
http://www.expatica.com/de/finance/Income-tax-in-Germany-for-employees_108112.html
https://dor.georgia.gov/individual-taxes