According to a comprehensive Germany-wide study carried out by the Ifo Institute for Economic Research on behalf of the Foundation for Family Businesses, family businesses bear a significant proportion of the total tax burden. The study revealed that the tax burden of the 500 largest family businesses in Germany is considerably higher than that of comparable non-family businesses.
The 500 largest family businesses alone pay almost as much income tax as the 27 DAX companies that are not family-controlled. From 2009 to 2013, an average of 28 percent of their profits went into corporate tax, trade tax and capital gains tax, as a study commissioned by the Foundation for Family Businesses and conducted by the Ifo Institute for Economic Research (“The contribution of family businesses to tax revenue in Germany”) shows. Non-family-controlled DAX companies contributed just 25 percent of their profits. If we factor in the income tax paid by members of partnerships and the withholding tax on dividends paid by family-owned limited companies, family businesses pay an average of 40 percent tax, whereas DAX-listed companies that are not family-owned, including their shareholders, pay a comparatively low 33 percent.
The study also highlights another difference – family businesses are more likely to pay income tax in their home countries than non-family businesses. While the family businesses studied paid approximately 69 percent of their income tax in Germany, the equivalent figure for the non-family-controlled DAX companies was only around 42 percent.