Separation principle (tax)
The separation principle is a principle of corporate taxation in Germany , especially when it comes to the taxation of corporations . In contrast to the transparency principle , which applies to sole proprietorships and partnerships , company and partner are taxed separately.
A distinction is made between the profit of the company and the income of the shareholder through distributions from the company (usually dividends). The income of the company is subject to corporate income taxes and the shareholder's income is subject to his income taxes accordingly. In order to avoid double taxation of the company's income on the one hand and on the shareholder level on the other hand, various mechanisms have been developed:
In Germany, the launch was before half-income method to the imputation system , the tax burden of the company considered in the taxation of the shareholder. After this system was judged by the European Court of Justice to be unsuitable for Europe, the half-income method (from 2009 partial income method and the withholding tax ) was switched to a (flat-rate) favored form of taxation at the shareholder level.
