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Taxes and bookkeeping for management consultants, IT consultants and interim managers with their own UG or GmbH
Many consultants work through their own UG (entrepreneurial company) or GmbH (limited liability company): projects through intermediaries, client travel and a small number of high-value invoices. The bookkeeping may be manageable; the tax bill often is not.
Typical tax topics for consulting businesses
1. Retaining profits in your company
Your GmbH’s profits attract roughly 30% combined corporation tax and Gewerbesteuer (trade tax). Withholding tax on investment income only arises on a distribution. Many consultants therefore retain profits in their company and invest from there.
2. Projects through intermediaries
If a project runs through an intermediary such as Hays or Gulp, the intermediary is your contractual partner. You often receive self-billing invoices instead of issuing your own. These must contain the same mandatory details as ordinary invoices.
3. Client travel expenses
Car journeys, trains, flights and hotels for client projects are company business expenses. Keep supporting receipts and a clear link to the project.
4. International clients
You invoice consulting services to businesses in other EU countries without German VAT and report them in your recapitulative statement. Services to business clients outside the EU are generally outside the scope of German VAT.
5. Cash VAT accounting
Cash VAT accounting can help when large clients have long payment terms. If prior-year turnover is below €800,000, you can apply to pay VAT only after your customer pays.
Bookkeeping, duties and deadlines
Bookkeeping: A UG (entrepreneurial company) or GmbH (limited liability company) is a commercial entity by legal form. You must keep double-entry books under the German Commercial Code (HGB) and prepare a Jahresabschluss (annual financial statements) each year, comprising a balance sheet, profit and loss account and notes. Micro-entities may omit the notes.
Annual financial statements: For small companies, you have up to six months after the financial year ends to prepare the statements. You must disclose them in the Unternehmensregister (company register) within twelve months of year-end. You submit them electronically to the Finanzamt (tax office) as an E-Bilanz (electronic tax balance sheet).
Annual tax returns (you file by 31 July of the following year if filing without a tax advisor):
- Corporation tax return: 15% of profit plus a solidarity surcharge of 5.5% on that tax
- Gewerbesteuer (trade tax) return: based on your municipality’s assessment multiplier
- Annual VAT return
- Investment income withholding tax notification if your company distributes profits
Ongoing: You file advance VAT returns monthly or quarterly, depending on the previous year’s VAT, by the 10th of the following month (one month later with a permanent filing extension). Corporation tax prepayments fall due on 10 March, June, September and December; trade tax prepayments on 15 February, May, August and November.
Record retention: Keep supporting documents such as invoices and bank statements for eight years, and books and annual financial statements for ten years.
You can manage your bookkeeping, prepare annual financial statements and create tax returns in Pluto. Employee payroll, non-standard international matters, tax groups, transformations and tax audits are outside its scope.
Frequently asked questions
Is a GmbH worthwhile for consultants?+
That depends on your profit and how much you want to withdraw. Profits retained in the company attract roughly 30% tax. A tax advisor can help with an individual calculation.
How do I handle self-billing invoices from intermediaries?+
They replace your own invoices and you record them as sales invoices. Check that the mandatory details are present.
Can I advise clients in Switzerland or the US?+
Yes. Consulting services to businesses outside the EU are generally outside the scope of German VAT.
Do I need a tax advisor?+
You remain responsible for your company’s bookkeeping, Jahresabschluss (annual financial statements) and tax returns. A tax advisor can help with complex matters such as restructuring or tax audits.
Pluto Tax is a software tool that supports you in preparing your own tax returns. It does not provide tax advice within the meaning of the German Tax Advisory Act.
Updated: October 2026