Partial income method
The partial income procedure is a procedure for the tax treatment of income from investments in corporations . As part of the 2008 corporate tax reform in Germany , the procedure replaced the previous half-income procedure , which had been in effect in Germany since 1977 in 2001, from the 2009 assessment period .
scope of application
Taxation depends on whether the shareholder is a natural person , partnership or corporation :
Natural person or partnership
In the course of the corporate tax reform of 2008, the introduction of a separate tax rate for capital income in the amount of 25% was decided, which together with the changes introduced in the area of capital gains tax is also referred to as the German flat-rate withholding tax .
Excluded from this (and therefore taxable according to the partial income method) are profits from the sale of shares in corporations within the meaning of Section 17 EStG (participation of at least 1% in the company's capital within the last five years). The same applies to operating capital income: If income from investments in corporations is received in the business assets of a sole proprietorship or a partnership, the partial income method replaces the previous half-income method. In detail (but not conclusive!):
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Distributions
- Participation in business assets : partial income procedure
- Participation in private assets : As a rule, the withholding tax (simplified, for details see Section 32d (2) No. 3 EStG)
- Participation from 25% in private assets Right to choose the partial income procedure with conditions, usually withholding tax
- Participation of at least 1% and the prerequisite that the shareholder is professionally active for the company: right to choose the partial income procedure with conditions, as a rule withholding tax
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Capital gains
- Participation in business assets : partial income procedure
- Participation in private assets : the withholding tax is the rule
- Participation from 1% ( § 17 EStG): partial income method
Corporation
If the shareholder is a corporation, distributions and capital gains from capital investments are, as before, fully tax-free (participation privilege) in accordance with Section 8b (1) of the Corporation Tax Act (KStG). However, there is a general prohibition of deducting business expenses of 5% of the respective distribution or the capital gain in accordance with Section 8b (5) KStG (so-called box penalty). The tax exemption is therefore only 95%. However, the corporation may claim all expenses associated with these investments as operating expenses. This does not apply to losses in value of the participations ( losses on sales or partial write-offs ). A further restriction in the assertion of losses has arisen since January 1, 2008 as a result of the Annual Tax Act 2008 : In the case of a direct or indirect participation of 25% and more, according to Section 8b (3) KStG, no losses from loans granted by the company are allowed have been asserted.
Procedure
60% of dividends, GmbH profit shares and corresponding capital gains are included in the taxable profit. This means that the previous half tax exemption under the half-income procedure is reduced to a tax exemption of 40% ( Section 3 No. 40 EStG). Correspondingly, the proportion of income- related expenses that can be taken into account is increased to 60% in accordance with Section 3c (2) EStG. The reduction in the corporate tax rate from 25% to 15% and the non-deductibility of trade tax from 2008 also have an impact on the result.
Case A: Executive officer
Executive employee of the corporation with a share stake of over 1%, 2009 option according to Section 32d (2) No. 3 EStG, partial income method chosen, 2007 and 2008 personal tax rate 42%
| 2009 | 2008 | 2007 | |
|---|---|---|---|
| Profit corporation before income taxes | € 100.00 | € 100.00 | € 100.00 |
| - Trade tax around 14% / 20% | € 14.00 | € 14.00 | € 20.00 |
| - corporation tax 15% / 25% | 15.00 € | 15.00 € | € 20.00 ** |
| - Solidarity surcharge on corporation tax 5.5% | € 0.83 | € 0.83 | € 1.38 |
| = Cash dividend (KESt not taken into account *) | € 70.17 | € 70.17 | € 58.90 |
| Assessment base 60% (50%) | € 42.10 | € 35.09 | € 29.45 |
| - income tax 42% | € 17.68 | € 14.74 | € 12.37 |
| - Solidarity surcharge on income tax 5.5% | € 0.97 | € 0.81 | € 0.68 |
| = remain after taxes (net dividend) | € 51.52 | € 54.62 | € 45.85 |
| Change in net dividends since 2007 | + 12.4% | + 19.1% | - |
| Change in income tax since 2007 | + 42.9% | + 19.2% | - |
| Change in corporate taxes * since 2007 | -37.8% | -37.8% | - |
* Corporate taxes are trade, corporation tax and solidarity surcharge. ** 25% of € 80.00, as trade tax is offset.
Case B: Low wage earners
Low-wage earners and small shareholders with a stake of less than 1%, no right to vote, but also in 2009 with a personal income tax rate of 15% (no withholding tax 25%) due to a more favorable arrangement:
| 2009 | 2008 | 2007 | |
|---|---|---|---|
| Profit corporation before income taxes | € 100.00 | € 100.00 | € 100.00 |
| - Trade tax around 14% / 20% | € 14.00 | € 14.00 | € 20.00 |
| - corporation tax 15% / 25% | 15.00 € | 15.00 € | € 20.00 |
| - Solidarity surcharge on corporation tax 5.5% | € 0.83 | € 0.83 | € 1.10 |
| = Cash dividend (KESt not taken into account *) | € 70.17 | € 70.17 | € 58.90 |
| Assessment base 100% (50%) | € 70.17 | € 35.09 | € 29.45 |
| - income tax 15% | € 10.53 | € 5.26 | € 4.42 |
| - Solidarity surcharge 5.5% | € 0.58 | € 0.29 | € 0.24 |
| = remain after taxes (net dividend) | € 59.06 | € 64.62 | € 54.24 |
| Change in net dividends since 2007 | + 8.9% | + 19.1% | - |
| Change in income tax since 2007 | + 138.2% | + 19.0% | - |
| Change in corporate taxes * since 2007 | -37.8% | -37.8% | - |
For the actual tax burden, the lower-priced tests are to be used within the framework of the assessment procedure. In this case, the income taxes levied too much by the capital gains tax (25%) due to their deductible nature are reimbursed. The partial-income method is with families GmbHs in conjunction with multiple voting and disquotaler profit distribution a popular model for tax optimization , as even children can 25% of the shares of a GmbH received from birth through donations and by yield test as 15,000 euros per child (as of 2017) without further taxation as an open profit distribution can be taken from the GmbH. Using this procedure, a kind of "family splitting " can be achieved - ideally with three children - analogous to spouse splitting .
Temporal application
The partial income method in the operational area and for capital gains i. S. d. Section 17 of the Income Tax Act applies from January 1, 2009.
criticism
The partial restriction of the deduction for income- related expenses could be seen as a violation of the objective net principle and thus of the performance principle derived from Article 3 (1) of the Basic Law .
literature
- See the evidence in the article on the final withholding tax and the 2008 corporate tax reform in Germany
- Hörster, NWB subject 3, page 14665
- Andreas Messerer: Corporate Tax Reform 2008 . Richard Boorberg, Stuttgart a. a. 2007, ISBN 978-3-415-03956-8 .
