Tax breakdown
The tax breakdown is a regulation in German tax law for the distribution of the tax revenue of companies based in several regional authorities to these regional authorities.
The tax breakdown concerns trade tax and corporation tax as well as wage tax and the interest deduction and is regulated by law for trade tax in the Trade Tax Act and for other taxes in the Decomposition Act. Corporate income tax and wage tax are split between federal states, trade tax between municipalities, and the interest discount between federal states and municipalities.
As a rule, the measure for the breakdown is the ratio of the wages and salaries modified according to various regulations, which are paid out by the company in the individual communities. Since the respective municipality has an influence on the tax amount by setting the trade tax assessment rate , the trade tax breakdown is not income-neutral, i.e. the total amount of the trade tax to be paid by a company fluctuates depending on the distribution of the trade tax to the individual municipalities in where the company is based.