Corporate tax

Corporation tax is a tax on the income of legal persons.

National corporation

• Corporation (DDR )
• Corporation ( Germany )

Problem of double taxation

The taxation of the profits of a corporation with corporation tax and the additional taxation of dividends at the shareholder level may lead to double taxation or double taxation. A double taxation arises for example in domestic tax issues if both corporation and shareholders in Germany are taxable. In cross -border situations ( eg, corporation, headquartered in France, shareholders resident in Germany ), the term double taxation comes into play.

• The classical system leads deliberately for repeated taxation of the same tax situation. The profits of the corporation are fully liable to corporation tax and then the distribution of profit fully from income tax. These systems are globally rare ( see below: systems without tariff reduction) and usually combined with very low corporate tax rates.
• Contrast to international practice, systems that reduce the preload of dividends at the level of the corporation by a tariff reduction in the taxation on the shareholder level and avoid a flat rate.
• Another way to avoid the double burden, is the corporation tax paid by the corporation in whole or in part, be attributed to the income tax (see below: credit systems, as well as in Germany 1977-2000: see also imputation ). Within Europe, this system has no future, since it is to be compatible with European law, has to be designed across borders ( made ​​possible a credit for foreign corporation must ). Of the states that still use imputation system, for example, France wants to also make a system change in the coming years.

While it comes in the aforementioned cases to economic double taxation of incorporation of the corporation and their society, in cross -border cases, there may be a double taxation for the same entity by two states want to tax the same income (eg, corporations economically with branches in other states are active or interest or royalty income abroad achieve ).

To avoid double charging in the area of income taxes of cross-border corporations double tax treaty between nation states are closed to both natural persons and legal persons. The method of relief from double taxation is dependent on the type of income and, by exempting the previously taxed abroad wins occur but also by limiting the tax deduction, foreign tax credit or a full waiver of the other State relating to taxation.

Corporate world

Note: If tax rates are compared, it must be ensured that other taxes payable as in Germany, the trade tax and the solidarity surcharge are not included in this list. In addition, countries tend to pay a lower tax rate to a broader tax base.

Systems with tariff reduction

In these systems, there is a flat relief, either by a partial tax exemption of dividends or by a lower tax rate. Within the corporation level ( subsidiary distributes to parent company ), these systems are mostly full tax exemption.

• In Belgium, the corporate tax rate is 34%, the dividend will be taxed at the shareholder level with either 25% or it can be assess.
• In Denmark, the corporate tax rate is 25%, dividends will be taxed at 25 % (from 45,500 DKK with the personal tax rate of the shareholder ).
• In Germany, the corporate tax rate is 15%. In addition, applicable surcharge of 5.5% based on the amount of tax so that the sales tax is a total of 15.825 % of the taxable income.
• In Finland, the corporate tax rate is 26%,
• In Lithuania, the corporate tax rate is 15%, the dividend will be taxed at 15%.
• In Luxembourg, the corporate tax rate is 22.9%, and the dividend is tax-free in half.
• In the Netherlands, the corporate tax rate is 25%, the dividend will be a flat rate of 25% of the distribution amount taxed (income box2 ).
• In Austria, the corporate tax rate is 25 % since 2005 (previously: 34%); the dividend will be taxed at 25 % capital gains tax.
• In Poland, the corporate tax rate is 19 %, the dividend will be taxed at 19%.
• In Portugal, the corporate tax rate is 25% ( plus 10% surcharge community ) the dividend is exempt from tax in half.
• In Sweden, the corporate tax rate is 26.3%, the dividend will be taxed at 30%.
• In Slovakia, the corporate tax rate is 19 %, the dividend is tax-free.
• In Slovenia, the corporate tax rate is 25 %, 40 % of the gross dividend is tax-free.
• In the Czech Republic the corporate tax rate is 19 % ( since 2010), dividends and distributions are taxed at 15%.
• In Turkey, the corporation tax rate is 20 %, the dividend will be taxed at 10%.
• In Hungary, the corporate tax rate is 19 % ( Up to 500 million Hungarian Forint net revenue but only 10 %).
• In the U.S. corporate tax rate is 35 % (New York), the dividend will be taxed at 15%.
• In Cyprus, the corporate tax rate is 10 %.

Systems without tariff reduction

The dividend is fully taxed at the shareholder level. Distributions to other corporations remain generally exempt from corporation tax.

• In Ireland, the corporate tax rate is 12.5%.
• In Switzerland there is a Federal corporation tax at the rate of 8.5 %. In addition, there are cantonal and municipal corporation with very different tax rates. The range of total load ranges from 16.4 % to 29.2 %, on average it is about 20%. The tax burden thus found constitutes deductible expense, thus reducing the taxable profit.

Full imputation systems

A double burden ( domestic ) or a double taxation (cross-border ) is avoided. The shareholders, the corporation tax paid by the corporation deduct from his income tax. Germany had with the force of 1977 to 2000 imputation long time such a system. The tax credit is typically regarded as taxable income.

• In Finland, the corporate tax rate is 26%, in Norway 28%. Since both countries tax the dividend at the same rate (29 % and 28 %), the corporate income tax credit for but, there is de facto no taxation at the shareholder level. By judgment of 7 September 2004 ( Rs Manninen ), the ECJ ruled that the Finnish Anrechungssystem European law, as a credit for foreign corporation is not done, what an infringement of the free movement of capital under the EC Treaty mean.
• In Italy, the corporate tax rate is 27.5 % ( plus 3.9% local tax ), Malta 35%; in both countries will be fully credited.

Partial imputation systems

Only some of the paid by the corporation corporation tax will be credited against the income tax of the shareholder.

In France, the corporate tax rate is 33.3 %, Japan 30 % in Canada ( Ontario ) 22.12%, Spain 25 % and the UK 30%.

Exemption systems / dividend exemption method

On taxation at the shareholder level is omitted, so that the risk of double taxation ( domestic ) does not exist.

Estonia rises in retained earnings (accumulated ) no tax ( rate: 0%), the corporation must pay 21% tax when dividends. Greece has a tax rate of 35 %, Latvia 15%.