Worldwide Corporate Taxes Summaries——Germany(2001-2002)

Worldwide Corporate Taxes Summaries——Germany(2001-2002)

责任编辑:北京中立诚会计师事务所  文章来源:北京中立诚会计师事务所  点击数:  更新时间:2006/7/11 4:58:55

SIGNIFICANT DEVELOPMENTS
The German system of taxing corporate income was fundamentally changed during 2000. The new system took effect (mostly) as of January 1, 2001, for companies with calendar year-ends, and it is that system that is discussed in the following paragraphs. However, existing companies may remain subject to, or affected by, changeover provisions of greater or lesser importance for as long as the next 15 years.

TAXES ON CORPORATE INCOME
Corporation tax (Korperschaftsteuer)/German business profits are subject to two taxes, corporation tax and municipal trade tax. Corporation tax is levied at a uniform rate of 25% and is then subject to a surcharge of 5.5% (the “solidarity levy”).
Trade tax (Gewerbesteuer)/The effective rate varies by location from just under 12% to 20% (around 18% for most larger cities). This tax is deductible as an expense for corporation tax.

CORPORATE RESIDENCE
A corporation is resident in Germany for tax purposes if either its place of incorporation or its place of central management is in Germany.
OTHER TAXES
Value added tax/Proceeds of sales and services effected in Germany are subject to VAT at the standard rate of 16% (7% on certain transactions). The taxpayer is generally entitled to offset against the VAT payable the amount of such tax charged by suppliers or paid on imports. Taxes on fuel, electric power, insurance, and some other products and services are not a compliance issue for most businesses, although they can be a significant additional cost factor.

BRANCH INCOME
Both corporation tax and trade tax are imposed on the taxable income of a foreign company’s German branch. The rates are the same for branches as for resident German companies, although the withholding tax on dividend distributions by German companies is not imposed on profits transferred by a German branch to its foreign head office.
INCOME DETERMINATION
General/In principle, conformity between book and tax reporting is required. However, major differences between the two can arise, such as where accruals or write-downs are made in the legal accounts but are not accepted for tax purposes.
Inventory valuation/Inventories are normally valued at the lowest of actual cost, replacement cost, and net realizable value. However, any write-downs below actual cost must be for specific reasons. If specific identification of the inventories is not possible, valuation at either standard or average cost is acceptable. The LIFO method is usually acceptable for tax purposes, provided it is also applied in the legal accounts. Theoretically, FIFO is unacceptable, unless its assumption
accords with the facts. In practice, this condition is often fulfilled.Long-term liabilities and accounts/Non-interest-bearing long-term liabilities other than advance payments received must be discounted at 5.5% per annum A similar provision applies to refurbishment and other accruals, which accumulate over time.
Capital gains/Capital gains (and losses) are taxed as part of ordinary business income (or losses). It is possible to postpone the taxation of part or all of the gains on real estate where the gain is ffset against the cost of replacement items.Dividends/Dividends received are exempt: Gains on the sale or disposal of investments are exempt; corresponding losses are not deductible.
Foreign income/Income, except dividends, received by a German corporation from foreign sources is included in taxable income for corporation tax purposes, unless a tax treaty provides for exemption. Double taxation is avoided by means of foreign tax credits or, at the taxpayer’s option, by a deduction of the foreign taxes as an expense.
Irrespective of any tax treaty, taxable income for trade tax purposes is reduced by income or dividends included therein that flow from a foreign branch or partnership anti-avoidance rules are in force with respect to subsidiaries in low-tax countries in certain lines of business.
Stock dividends/In principle, a declaration of stock dividends (by converting reserves to capital stock) by a company will not lead to taxable income for the shareholder or to other tax effects. Subsequent capital reductions will, however, be treated as cash dividends in most circumstances. There is no longer any German tax reason for distributing a stock dividend as opposed to merely leaving accumulated profits on the books to be carried forward. As regards current-year profits, the decision, therefore, depends on the situation in the investor’s home country. There may still be a reason to distribute any remaining 2000 and prior-year earnings and to immediately reinvest the amount net of the withholding tax by taking it to capital reserve.

DEDUCTIONS
Depreciation and depletion / Depreciation is normally calculated by either the straight-line or the declining-balance method over the anticipated useful life. With the exception of certain buildings, the declining-balance method may be used only for movable fixed assets, and the annual rate may not exceed twice the rate that would have applied under the traight-line method and may not be more than 20%. The residual value of the asset is taken into account only if it is material, while gains on a sale are treated as normal business income. In addition to normal depreciation, special depreciation is deductible for tax purposes in certain limited circumstances. Tax depreciation must be reflected in the legal accounts. In addition to depreciation on the straight-line and declining-balance bases, other methods are allowed, including depreciation based on output or depreCIAtion (depletion) based on the gradual exhaustion of the investment in a mine.
Net operating losses/Losses are carried forward without a time imit. For corporation (but not trade) tax, there is an optional carryback to the previous year of up to DM1 million.
Payments to foreign affiliates/A German corporation can claim a deduction for royalties, management service fees, and, within limits, interest charges (if not profit related) paid to foreign affiliates, provided such amounts are at arm’s length. Detailed provisions define this. The limits on interest paid to affiliates are basically debt-to-equity ratios of 1.5:1 for operating companies or 3:1 for German holding companies.
These debt-to-equity ratios do not apply to trade tax.
Taxes/All taxes borne are deductible except for corporation tax itself and VAT on nondeductible expenses. Late payment interest and similar charges on nondeductible taxes are also nondeductible.

GROUP TAXATION
For trade tax, a German entity pools profits and losses with its German subsidiaries if the mutual business and organizational links are so close that the group effectively constitutes a single business (Organschaft).
For corporation tax, there will be Organschaft where the parent holds more than 50% of the voting rights over the subsidiary and where parent and subsidiary conclude a formal five-year, court-registered profit-pooling agreement.

TAX INCENTIVES
Inward investment and capital investment/There are no longer any significant incentives available for new projects. Capital investment in manufacturing, and in certain other activities of smaller businesses, in the former East Germany can qualify for a 10% investment grant. A qualifying project must be completed by December 31, 2001, or, in some cases, by December 31, 2004.
Holding companies/The main speCIAl provision for holding ompanies is the 3:1 related-party debt-to-equity ratio (as opposed to 1.5:1 for operating subsidiaries).
Investment in subsidiaries / Incentives for investment in subsidiaries include the following.
1. Tax exemption of capital gains on the sale of investments.
2. Nondeductible expenses directly connected with tax-free dividend income of foreign source are legally defined as 5%. he nondeductible expenses directly connected with tax-free dividend income of domestic source are no higher than the dividend received on the investment concerned.
Other incentives/There are no other generally applicable significant incentives. However, local authorities may offer facilities on favorable terms, such as the provision of cheap land on industrial estates.

WITHHOLDING TAXES
Domestic corporations paying certain types of income are required to withhold tax as follows. See Note 1.
                                                                     Rentals from
Recipient of German-source income       Dividends     Royalties     movable assets
                                        (Note 1)
                                             %            %             %
Resident corporations and individuals……   20            -             -
Nonresident corporations and
  individuals (Note 2):
EU corporations (Note 1) ………………       -             -             -
Nontreaty…………………………………         20           25            25
Treaty (Note 3):
  Argentina (Note 4)……………………      15/25          15             -
  Australia………………………………         15           10            10
  Austria…………………………………       5 (15)          -             -
  Bangladesh……………………………          15           10            10
  Belgium………………………………           15            -             -
  Bolivia ………………………………        10/25          15            15
  Brazil…………………………………          15         15 (25)         15
  Bulgaria (Note 4)……………………       15/20          5              5
  Canada (Note 4) ……………………        15/20          10            10
  China, P.R. (Note 4)…………………      10/20          10             7
  Cyprus………………………………         10 (15)        0 (5)           -
                                                   (Note 5)
  Czech Republic ……………………        5 (15)          5              5
  Denmark……………………………          15 (5)          -              -
  Ecuador ……………………………           15            15            15
  Egypt (Note 4) ……………………          15         25 (15)          15
  Estonia………………………………         5/15           10             5
  Finland………………………………      10 (15)/20        5              5
  France (Note 4) ……………………      5 (10)/20         -             -
  Greece………………………………           10             -             -
  Hungary (Note 6) …………………      5 (15)/20          -             -
  Iceland………………………………        5 (15)           -             -
  India (Note 4)………………………       10/25           10            10
  Indonesia……………………………        10 (15)         10            10
  Iran…………………………………        15 (20)          10            10
  Ireland, Rep. of……………………        15              -             -
  Israel………………………………          20             5              5
  Italy………………………………         15 (10)      5 (Note 7)         5
  Ivory Coast (Cote d’Ivoire) (Note 5) 15/20            10            10
  Jamaica……………………………        10 (15)           10            10
  Japan (Note 6)……………………        15/20            10            10
  Kazakhstan (Note 4) ……………        5/15             10            10
  Kenya ……………………………            15             15            15
  Korea, Rep. of……………………       10 (15)        10 (15)          15
  Kuwait (Note 4)…………………         15/20            10            10
  Latvia (Note 4) …………………          5/15           10             5
  Liberia……………………………        10 (15)         20/10           10
  Lithuania (Note 4) ………………         5/15           10             5
  LuxeMBOurg………………………            5              5         &nb

[1] [2] 下一页

北京中立信永税务师事务所简介下载
地 址:北京朝阳区北苑路13号领地OFFICE大厦B座7层701室
电 话:(010)- 52086638 51095615
传 真:(010)- 52086636
邮 编:100107
E-mail:supercpa@163.com
北京中立诚会计师事务所简介下载
地 址:北京朝阳区北苑路13号领地OFFICE大厦B座7层701室
电 话:(010)- 52086638 51095615
传 真:(010)- 52086636
邮 编:100107
E-mail:supercpa@163.com