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§ 34a EStG - Einstieg in eine rechtsformneutrale Besteuerung oder Option für ein virtuelles Trennungsprinzip?

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  • Claudia Wesselbaum-Neugebauer

    ()
    (Schumpeter School of Business and Economics Bergische Universität Wuppertal)

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    Abstract

    The paper addresses the question whether the preferential treatment of retained earnings according to section 34a EStG is suitable to achieve a comparable tax burden of partnerships and corporations. To calculate the tax burden on retained earnings requires the combination of the progressive personal income tax, the trade tax, which varies widely depending on the community and partnerships payments for interest, rent, leasing, and royalties, as well as the preferential tax rate. The resulting tax has to match the business tax rate of corporations, in order to tax retentions irrespective of the legal form. It turns out that, due to the specifics of the German local tax, the reduced tax rate has to be calculated individually. It can be shown that it is impossible to determine a reference value for all domestic companies. By introducing a "virtual principle of separation" (virtuelles Trennungsprinzip) we allow entrepreneurs to separate between the level of the firm and the ow ner of the firm, when retained earnings are to be taxed. The retained profit is taxed at the corporate income tax rate of 15 %, the solidarity surcharge of 5.5 % and the trade tax rate; once the profit is distributed, it is taxed at the progressive personal income tax rate of the partner.

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    File URL: http://elpub.bib.uni-wuppertal.de/servlets/DerivateServlet/Derivate-1514/sdp08009.pdf
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    Bibliographic Info

    Paper provided by Universitätsbibliothek Wuppertal, University Library in its series Schumpeter Discussion Papers with number sdp08009.

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    Length: 41
    Date of creation: Dec 2008
    Date of revision:
    Handle: RePEc:bwu:schdps:sdp08009

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    Web page: http://elpub.bib.uni-wuppertal.de

    Related research

    Keywords: business taxation; preferential treatment of retained earnings; principle of separation; trade tax;

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    1. Fred Ramb & Alfons J. Weichenrieder, 2005. "Taxes and the Financial Structure of German Inward FDI," Kiel Working Papers 1252, Kiel Institute for the World Economy.
    2. Luc Laeven & Harry Huizinga & Gaetan Nicodeme, 2007. "Capital Structure and International Debt Shifting," IMF Working Papers 07/39, International Monetary Fund.
    3. Homburg, Stefan & Houben, Henriette & Maiterth, Ralf, 2007. "Optimale Eigenfinanzierung der Personenunternehmen nach der Unternehmensteuerreform 2008/2009," Diskussionspapiere der Wirtschaftswissenschaftlichen Fakultät der Leibniz Universität Hannover dp-365, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
    4. Homburg, Stefan, 2007. "Die Abgeltungsteuer als Instrument der Unternehmensfinanzierung," EconStor Open Access Articles, ZBW - German National Library of Economics, pages 686-690.
    5. Clausing, Kimberly A., 2003. "Tax-motivated transfer pricing and US intrafirm trade prices," Journal of Public Economics, Elsevier, vol. 87(9-10), pages 2207-2223, September.
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