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EASTERN EUROPE: "Central and Eastern European car market continues significant growth"

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back to index backEUROtalk March,  2005


Planned German company tax reform

The most recent political debate in Germany once again focuses on a tax reform that would increase the attractiveness of Germany for investors. While details and timing of the reform are unclear, a reduction of the tax rate applied to corporate retained earnings seems to be favored. According to this proposal, a higher portion of the dividends would be taxed in the hands of the taxpayer to compensate for the reduction in tax revenue resulting from a lower tax rate at the corporate level. It is unclear whether and how partnerships would be included in the potential reform. This question, however, is crucial for the effectiveness and the acceptance

(by the business community) of a tax reform because partnerships are one of the most common entities used for doing business in Germany. If the reform is implemented, it likely will not be enacted before 2007. Both major German parties have declared company taxation to be one of their priorities after the 2006 general elections.

Source: Deloitte - GAI


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