Basic principles of business taxation
Principles of income taxation
A company’s tax status depends primarily on the legal form
chosen by its organizers. Corporations are taxable entities
subject to corporate income tax, trade tax, and the solidarity
surcharge.
Partnerships are not taxable entities for corporate or income tax
purposes. The income determined at the level of the partnership
is allocated to the partners. The partnership prepares returns for
informational purposes, and the partners declare their respective
shares of partnership profts or losses on personal tax returns.
The partnership itself is subject only to trade tax. The determina-
tion of income at the level of a partnership is generally similar to
that of a corporation. However, the income of a non-commercial
partnership can also be determined under a different method.
The main aspects of income determination are explained below.
Specifc issues affecting the taxation of partnerships are high-
lighted too.
A permanent establishment is not a legal form .
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