Shareholder's taxation
Profit distributions by a domestic or foreign corporation to a domestic corporation are left out of account on principle when determining the income of the receiving corporation.
When the profit leaves the level of corporations and is distributed to individuals, the following applies:
1. Dividends paid to individuals - Privately-held equity
Capital income has been liable for so called Abgeltungsteuer since 1 January 2009. The distributing company deducts the tax at source at a flat rate of 25% (plus solidarity surcharge). This deduction will usually settle the tax.
2. Dividends payable to individuals - Equity held in working capital
Only 60% of dividends are taxable, if they accrue in working capital. The withholding tax of 25 % (plus solidarity surcharge) deducted on payment of the dividend is credited against income tax.
Further information, e.g. on dividend payments to incorporated companies and dividend payments abroad, will be found in the following information sheet:
Tax on Income from Capital Assets from 2009
back to the top