Half-income method

In den Brühler Empfehlungen zur Reform der Unternehmensbesteuerung wurde eine Abschaffung des körperschaftsteuerlichen Anrechnungsverfahrens angeregt; sie erfolgte allerdings erst mit dem Steuersenkungsgesetz (siehe auch Income and corporate tax reform 2001-2005).

Corporations are charged with a uniform, significantly lower tax rate of 25 % (only VZ 2003: 26.5 %) (reform of the corporation tax).
Only half of the distributions by the corporation are recorded as income by the shareholder (Section 3 No. 40 EStG) and are subject to individual taxation. In return, only half of the expenses associated with the income can be deducted (Section 3 c (2) EStG). Corporations can receive dividends from other corporations tax-free because of the definitive corporate income tax charge (Section 8b (1) KStG).

Likewise, capital gains from corporation shares are tax-free for corporations (Section 8b (2) KStG). Profit reductions in connection with corporation shares are not taken into account (Section 8b (3) KStG). Section 8b (3) and (5) KStG fictitiously assume in the case of dividends and capital gains that 5 % non-deductible operating expenses have been incurred.

The model of the half-income method is based on the Austrian “half-rate method”, in which the full assessment base is subject to half the income tax rate. Internationally, a lower corporate tax rate would be a better solution without the half-income method.

Das Halbeinkünfteverfahren regelte seit dem Jahr 2002 die steuerliche Determination of profits bei Einnahmen aus Beteiligungen an Kapitalgesellschaften. Nach diesem Verfahren wurden Dividenden und Einnahmen des Aktionärs aus Aktienverkäufen nur zur Hälfte besteuert.

The same was true for dividends from investment funds. At the beginning of 2009, the half-income method was no longer applicable. Profits from share sales and dividends are now taxable as a whole.

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