In Germany there is a contradiction between relatively low public revenue and high tax rates. If, on the basis of macroeconomic accounting, one compares inland revenue with business profits, one will discover an account balance of about 100 billion Euros for the year 2001 which corresponds to 5% of GDP, as was stated by the Berlin based German Institute for Economic Research (DIW) in its weekly report 5/2007.
The DIW assumes that there is a causal relationship: maybe it is the very fact of high tax rates in Germany which offers an incentive to make use of tax planning to major enterprises.
By international comparison the corporate tax rates for German companies are relatively high. However, the revenue taken in by tax authorities is quite low compared with other countries. Current company taxation yields tax revenues of about 100 billion Euros which amounted to approximately 4% of GDP in 2006. Although tax revenue as a whole has strongly increased in recent years, Germany is lagging behind by international standards as far as the revenue from major enterprises is concerned. Most European neighbouring countries reformed their corporate tax and investment income tax policies. Tax rates were markedly lowered. Nevertheless, in many countries tax revenue could be stabilized or even increased given that at the same time the assessment tax base was broadened.
In 2001 Germany adopted tax reforms too. However, there are still high tax rates which lead to the German tax system being susceptible to tax planning strategies which are in particular made use of by major enterprises which lessen their taxable profits or have them taxed abroad. 