Taxation of companies and their shareholders

The taxation of companies and the associated shareholders depends on the legal form of the business.

Taxation of Companies

In the taxation of businesses, a basic distinction must first be made. Partnerships are taxed quite differently than corporations. The partnerships themselves are not even considered as taxable entities. Therefore, the individuals behind them are taxed. However, for corporations, it is such that the company is a tax subject. Thus, taxation takes place at the level of the company. Also, under certain circumstances, taxation of the individual shareholders may occur. This can lead to economic double taxation.

Taxation of Partnerships

Since partnerships are not their own tax subjects, taxation takes place at the level of the shareholders. The income is therefore allocated to the individual partners (DBG 10 I). The partners have the opportunity to transfer assets from the business assets to private assets and vice versa. These cases are referred to as private withdrawals or business contributions. The company's income is considered as income from self-employment for tax purposes and is taxed accordingly. There is no economic double taxation, as taxation only occurs at the level of the shareholders.

Taxation of Corporations

Corporations like the AG or GmbH are independent tax subjects. The income is thus subject to corporate income tax (DBG 49 I in conjunction with DGB 57). The corporation is therefore taxed at the level of the company. The distribution of profits, for example in the form of dividends, is possible. The distributed profits must be taxed again at the level of the shareholders. This leads to economic double taxation.

   
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