You usually don't pay yourself all the money your company makes as salary. At least in Germany, your salary has to be "reasonable" (i.e. similar to what you'd pay someone who isn't a shareholder), otherwise it's considered a hidden distribution of profits ("verdeckte Gewinnausschüttung") and will not affect your company's taxable revenue. You'll always pay corporate (~30%) on your profits & capital gains tax (25%) on the remainder after corporate tax when you distribute it. You'll have to distribute it at some point.

"Some VAT on spending" is a bit hand-wavy, don't you think? If you take those 67k (probably a bit less in Germany, because you'll pay for health insurance one way or another, and it's not a 100% deduction) and spend it, most of that will be at the normal VAT rate, which in Europe is between 15 and 27%, the average is approximately 20%. That'll be another 10k or so (or another 10% of income), you're now at ~43%.

Buying gas for your car (~50% of sale price are taxes), or natural gas (~30% taxes), oil (20%), or electricity (27%) for your home, and you'll pay taxes, too. There's various small amount (~250€/yr for public television; nominally not a tax in Germany for legal reasons, but it would be dishonest not to include it -- it is by law, there's no way to opt out, you don't have a claim to anything in return, its height is controlled by the state), it adds up.

I doubt you could get to 70%, but 50% isn't far off if you actually spend your money (which you will have to at some point, so I don't see a reason why you wouldn't consider those taxes).

> At least in Germany, your salary has to be "reasonable" (i.e. similar to what you'd pay someone who isn't a shareholder), otherwise it's considered a hidden distribution of profits ("verdeckte Gewinnausschüttung") and will not affect your company's taxable revenue. You'll always pay corporate (~30%) on your profits & capital gains tax (25%) on the remainder after corporate tax when you distribute it. You'll have to distribute it at some point.

Okay, that's _really_ different to how it works in Ireland, and I think just shows the government trying to incentivise slightly different things. I think the key difference is that, per the above, dividends are taxed as capital gains in Germany (weird; they're clearly not capital gains); in Ireland they're deemed unearned income and taxed more or less as normal income (with some slightly weird treatment at the edges, I think; I'm not sure that you can offset income tax on them with pension contributions, say).

I'm a bit curious _why_ Germany wants to incentivise retention and payout via dividend vs payout via salary for small companies (it seems like, for high income people, corporate tax + dividend there would probably be lower than the highest band of tax?) but that's clearly what's going on here.

Sorry, I might have added confusion: this applies to limited-liability in Germany (all kinds, the cheap ones and the regular ones). If you're running your company with unlimited liability, there is no salary (I guess technically you could pay yourself a salary, but there's no reason you ever wood vs a limited liability which is its own entity) and your income from that work will be taxed as regular income (though labeled & treated slightly differently).

But since limited liability is a pretty good thing to have and is affordable now, these days many people opt for it, especially if you're somewhat successful because one of the disadvantages is increased accounting duties -- but if you make more than 50k (or something thereabout; in profits) without a limited liability, they'll apply the same duties to you.

Corporate tax + dividends is usually more expensive than personal income. On 100k profits, you'll pay 30k taxes, and then you'll distribute 70k of which 25% are tax (capital gains), so another 17.5k gone, and you've paid 47% until the money is yours. Top marginal income tax is 45% (250k+/yr). Accountants are technically optional, but practically mandatory for LLCs, and they cost 2-3% of revenue (by law, no negotiations possible).

Germany very much doesn't like self-employment when you look at it from that angle. But I doubt there's an intention behind it, it's mostly historical: limited liability is supposed to be the larger companies, not an electrician with two employees. But Germany doesn't adjust, so our 2nd highest marginal tax rate (42%) starts at 66k€, which around 10% of employees in Germany hit, and it rarely gets adjusted to account for inflation. But no worries: there's been a lot of noise to increase this to 57%, payable on income > 80k€. We'll get to the 70% eventually.