Capital gain

Capital gains arise when assets, parts of operations, equity investments or companies are sold and the part or market value is higher than the book value. The hidden reserves will be realized through the sale. The profits from the sale of a business are taxable income of the respective type of income: §§ 14, 16, 18 III EStG (see discontinuation of business).
The half-income method is used for the sale of shares in a corporation. If a corporation sells holdings in another corporation, the capital gains are tax-free (Section 8b (2) KStG); 5 % of the profit count as non-deductible business expenses (Section 8b (3) KStG). Profits from private sales are only taxable under certain conditions. Abroad, special regulations apply to so-called capital gains.

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