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.
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.