Corporate tax on income

Definition of corporate income tax

Corporate income tax is subject to the income of corporations, e.g. B. the AG, GmbH, KGaA. In terms of corporate income tax, income largely corresponds to that of the EStG. For taxpayers who are obliged to keep books according to the provisions of the HGB, it includes all income as income from commercial operations, except for income from non-self-employed work (Section 8 (2) KStG).

Corporate income tax income is not a conceptually defined variable, but is determined purely on an additive basis. The result of the trade balance is assumed, from which the result of the Tax balance is derived and attributions and reductions are taken into account.

Comparison of the EStG and KStG

Compared to the EStG, the KStG contains several special provisions:

  • Corporate income tax is based on a different tax rate than income tax.
  • Personal performance is not taken into account.
  • Special editions and there are no extraordinary burdens because the corporation lacks privacy.

Tax base

According to § 7 KStG, the tax base is the income that the corporation received within a calendar year, ie corporation tax is usually an annual tax.

In the case of legal entities that have to keep books according to the provisions of the German Commercial Code (HGB), the profit - analogous to the regulation in income tax law - is to be determined according to the financial year for which they regularly close (Section 7 (4) KStG). If the fiscal year for these taxpayers differs from the calendar year, the profit from the commercial operation is deemed to have been obtained in the calendar year in which the fiscal year ends.

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