CIT

Question 1

What are the different types of dividend distribution?

How much is (not) tax deductible?

How much of related expenses can we deduct?

How much tax on the profit?

1.
2.
3.
4.

Answer 1

1. a. Business Assets - Corporation: (Shareholder >= 10%, §8b I KStG): 5% of dividend taxable (§8b V KStG); 100% expenses deductible; 15% CIT (§23 I KStG) and solidarity surcharge
2. b. Business Assets - Corporation: (Shareholder below 10%, §8b IV KStG): 100% dividend taxable, 100% related expenses deductible; 15% CIT (§23 I KStG) and solidarity surcharge
3. Business Assets Individual (Partial Income Method); 60% of dividend taxable (§3 no. 40 lit. d EStG); 60% of expenses deductible (§3c II EStG) max 45% PIT and maybe soldarity surcharge
4. Private Assets Individual (Seperate Tax Scale); 100% dividend taxable (§20 I no. 1 EStG), related expenses NOT deductible! only savers lump sum §20 IX EStG; 25% income tax based on separate tax scale and maybe solidarity surcharge (§32d I EStG)

BA: >=10%; 5% dividend tax; <10% 100% tax; all expenses deductible; 15% CIT

BAI: 60% dividend taxable; 60% expenses DEDUCTIBLE; max 45% PIT

PAI: 100% dividend taxable; no expenses deductible only savers LS, PIT 25%

Question 2

What’s the checking scheme?

Answer 2

1. Personal Tax Liability
2. Material Tax Liability
   2.1 always income from business operations
   2.2 always profit determination acc to provisions of EStG and KStG
3. Tax liability: taxable income x tax rate (CIT - advanced payments of CIT - withheld cap gains (31) = final payment of refund (31))

Question 3

How do we do the accrual accounting method?

1.
2.
3. (4)
4.
5.
6.

Answer 3

(§§4 I, 5 EStG)

• Determine Tax balance sheet/ reconciliation (profit from comm. BS and maybe corrections)
• Corrections of contributions and withdrawals (any income not related to business - correct contribution | any expense not related to business- withdrawal)
• any operating expenses exempt from tax?
  Check: hidden distribution (§8 III 2 und 3)
  Check: non deductible operating expenses (§8b III)
  Check: tax exempt operating income (§8b I, II)
  Check: donations and membership subscription (§9 no 2 )
• loss deduction §8 I and §10d EStG
• • tax allowance pursuant to §24-25 ( not for corporation)

= taxable income