MAJOR DEVELOPMENTS
Some important amendments were made in 1996 with regard to the
valuation of real estate, real estate transfer tax, and inheritance and gift tax. Net wealth tax has been abolished effective January 1, 1997.
Before 1996, the valuation of real estate, which has an impact on inheritance and gift tax and on real estate transfer tax if no other consideration is available, was based on 140% of the values in the year 1964. Due to the dissimilarity with the valuation of other assets, this was held unconstitutional. The new rules lead to a tax value of 50% to 75% of the actual market value.
For inheritance and gift tax, the tax classes and rate structure were reorganized. Most of the allowances have been increased, e.g., from DM 250,000 to DM 600,000 for spouses and from DM 90,000 to DM 400,000 for children, and after an allowance of DM 500,000 only 60% of business assets are taxable.
The tax rate on real estate transfer tax was increased from % to 3.5% of the consideration or the value of real estate.
The most important changes of VAT relate to chain ransactions and intra-community triangular transactions. These are now treated similar to other EU-member states.
As of January 1, 1998, trade tax on capital will no longer be imposed.
The solidarity surcharge will be reduced effective January 1, 1998, to 5.5%.
OVERVIEW
All income is subject either to income tax (Einkommensteuer) or to corporation income tax (Krperschaftsteuer), depending on whether the income is earned by an individual or company. Furthermore, all business income is subject to municipal trade income tax (Gewerbeertragsteuer). For purposes of the income tax, corporation income tax, and trade tax assessment, it is necessary to distinguish between resident taxpayers and nonresident taxpayers, i.e., between taxpayers who are subject to unlimited tax liability and those who are subject to limited tax liability, respectively.
German law does not use the expressions resident?and nonresident,but instead distinguishes between:
q Taxpayers with unlimited tax liability (unbeschrnkte
Steuerpflicht), who are subject to income tax on their orldwide
income;
q Taxpayers with limited tax liability (beschrnkte
Steuerpflicht), who are subject to income tax on various types of German-source income.
A company is considered to be resident in Germany (i.e., subject to unlimited tax liability) if either its seat?(Sitz) or place of management (Ort der Geschftsleitung) is located in the Federal Republic of Germany. Since a company organized under German law is required to specify in its articles a seat located in Germany, all German companies are resident taxpayers. If a nonresident company (i.e., a company having its seat and place of management abroad) conducts business in Germany through a branch, the nonresident company itself will be subject to tax on branch profits.
East Germany. With the merger of the former German Democratic Republic into the Federal Republic, the tax system of the Federal Republic has been adopted with some minor exceptions, which aim at encouraging investment in the new Federal States. The following special rules apply:
q Special depreciation of up to 50% for both movable and
immovable property (except aircraft and vessels in international trade) are available;
q Various investment subsidies are granted.
INCOME TAXES ON CORPORATIONS
1. Rates
The normal tax rate for corporations subject to unlimited tax liability is 45%. The tax rate is reduced to 30% for distributed profits. In addition, shareholders subject to unlimited tax liability (i.e., resident shareholders) may claim a tax credit against their personal income tax (or corporation income tax) liability equal to the amount of corporation income tax paid by the company on the distributed profits.
A solidarity surcharge of 7.5% is effective as of 1995. The rate of 7.5% will be reduced to 5.5% effective January 1, 1998. It is based on the assessed corporation income tax after deducting the imputed tax credit attached to dividends received from German companies. The tax rates for retained earnings and for distributed profits are therefore 48.375% and 32.25%, respectively. The surtax will also be imposed on withholding taxes, but tax treaty limitations will be respected.
Corporations can distribute tax-exempt foreign profits if the recipient is another corporation without incurring additional tax. In this case, there is no tax on distributed profits and the recipient has no taxable income. However, withholding tax will be levied.
2. Local Income Taxes
There are no state or provincial income taxes. However, the municipal authorities impose a trade tax based on business income (see Overview).
Though this business income is based on profits, the profit figure is subject to a f
[1] [2] [3] [4] 下一页
