Short answer: Vietnam applies a standard 20% corporate income tax, reduced to 15–17% for small enterprises under Law 67/2025/QH15; Germany levies 15% federal corporation tax plus a solidarity surcharge and municipal trade tax, bringing the combined burden to roughly 30–33%. The biggest differences lie not in the headline numbers but in how taxable income is computed, how investment incentives work, and what filing obligations apply.
When investors must compare the two systems
A German group setting up a factory or subsidiary in Vietnam, a Vietnamese company opening a GmbH in Germany, or a holding structure spanning both countries all face the same question: where does profit get taxed, at what effective rate, and what paperwork proves it. Getting the comparison wrong means mispriced investment decisions and avoidable disputes with two tax administrations.
Legal framework in force as of 19 October 2026
Vietnam. The Corporate Income Tax Law 67/2025/QH15 (passed 14 June 2025, effective 1 October 2025, applicable from the 2025 tax year) sets the standard rate at 20% (Article 10), with 15% for enterprises whose annual revenue does not exceed VND 3 billion and 17% for revenue between VND 3 billion and VND 50 billion, measured on the preceding tax year’s revenue. Oil and gas activities face 25–50% and rare-resource extraction 50% (40% in specially disadvantaged areas). Implementing rules sit in Decree 320/2025/ND-CP (15 December 2025) and Circular 20/2026/TT-BTC (effective 12 March 2026). Vietnam also applies a 15% qualified domestic minimum top-up tax (QDMTT) under Resolution 107/2023/QH15 for large multinational groups. The Vietnam–Germany double taxation agreement (signed 1995) remains in force.
Germany. The Corporation Tax Act (Körperschaftsteuergesetz, KStG) imposes a flat 15% federal rate plus a 5.5% solidarity surcharge on the tax itself, an effective 15.825%. On top comes municipal trade tax (Gewerbesteuer) under the Trade Tax Act, set by each municipality’s multiplier — typically adding 14–17 percentage points. The combined nominal burden is about 30–33% depending on location (around 30.2% in Berlin, near 33% in Munich). Legislation enacted in 2025 will cut the federal rate from 15% to 10% in five annual steps starting with the 2028 fiscal year. Germany has also implemented the global minimum tax through its Minimum Tax Act (Mindeststeuergesetz).
Five decisive differences
1. Effective rates and who pays them. A mid-sized Vietnamese manufacturer with VND 40 billion in revenue pays 17%; its German counterpart in Munich pays roughly 33% on the same profit — nearly double. But groups above the EUR 750 million global revenue threshold face a 15% floor in both countries under Pillar Two, which compresses the gap for the largest investors.
2. Investment incentives. Vietnam grants incentives by zone and sector: preferential rates and tax holidays/exemptions for encouraged projects (Article 13 of Law 67/2025). Germany offers almost no rate incentives; support comes through accelerated depreciation and the research allowance (Forschungszulage). An investor choosing Vietnam for a headline incentive must model the QDMTT claw-back if the group is in scope.
3. Loss relief. Both systems allow loss carryforward, but the time limits and offset caps differ and have changed in recent reforms — confirm the current year’s rule before building a tax model, rather than relying on pre-2025 summaries.
4. Deductible expenses and transfer pricing. Vietnam’s transfer-pricing rules now sit in Decree 255/2026/ND-CP (effective 1 July 2026, applicable from the 2026 tax year), replacing Decrees 132/2020 and 20/2025, with a raised documentation-exemption threshold and new related-party definitions. Germany applies the arm’s-length principle under the Foreign Tax Act (Außensteuergesetz) with Master File / Local File documentation. Intra-group pricing between a Vietnamese plant and a German parent is audited from both ends.
5. Filing and payment rhythm. Vietnam requires quarterly provisional payments plus an annual finalization under the Tax Administration Law 108/2025/QH15. Germany requires quarterly advance payments (10 March, 10 June, 10 September, 10 December) plus an annual return. Missing a German advance payment triggers interest automatically; missing a Vietnamese provisional payment draws late-payment interest too — the calendars simply do not align.
Practical checklist for businesses operating in both countries
- Model the effective rate on your own numbers: Vietnamese SME rates (15%/17%) against the specific German municipality’s trade-tax multiplier, not the national average.
- Check whether the group falls under QDMTT (Vietnam) or the Minimum Tax Act (Germany) before counting on any incentive.
- Align transfer-pricing documentation: one coherent Master File narrative that satisfies both Decree 255/2026 and German documentation rules.
- Put both filing calendars in one compliance tracker — the quarterly dates differ.
- Confirm dividend withholding under the Vietnam–Germany tax treaty for your specific holding percentage before repatriating profits.
Frequently asked questions
Is Germany’s corporate tax really almost twice Vietnam’s?
On headline rates, roughly yes for mid-sized companies: about 30–33% combined in Germany versus 17–20% in Vietnam. The gap narrows for very large groups subject to the 15% global minimum tax, and Germany’s legislated rate cut from 2028 will reduce it further.
Can a Vietnamese subsidiary of a German group use the 15% SME rate?
Only if it genuinely meets the revenue test on its own. Law 67/2025 denies the preferential SME rates to subsidiaries and affiliates of groups whose related enterprises do not qualify — a common trap for group structures.
Does the Vietnam–Germany tax treaty eliminate double taxation on dividends?
The treaty allocates taxing rights and caps source-country withholding, but it does not eliminate it. Verify the applicable rate for your holding ratio and complete the treaty-relief paperwork before paying dividends.
Which country’s transfer-pricing documentation should we prepare first?
Prepare one consistent set: the Master File tells the group’s story once, and each Local File (Vietnamese under Decree 255/2026, German under domestic rules) applies local thresholds and formats. Contradictory narratives are what trigger audits.
We are planning a 2027 investment — should we wait for Germany’s rate cut?
Do not decide on the rate cut alone. The reduction phases in from 2028 over five years, while Vietnam’s incentive package, labor costs, and market access usually dominate the location math. Model both scenarios with a tax adviser.
Need a side-by-side tax model for your Vietnam–Germany structure? The FLAT Law Firm team advises foreign investors on Vietnamese tax structuring every day — contact us for a case-specific assessment.
This article has been quality-reviewed by the FLAW AI Legal Council