For the 2025 federal election campaign, left-wing parties in particular are once again calling for capital gains to be taxed more heavily, as they are unfairly low compared to the taxation of earned income in particular. Some of them even want an additional levy on social security contributions. In fact, the 25% flat-rate tax on share profits, dividends and interest income introduced in 2009 does not seem particularly high. But a closer look reveals that appearances are deceptive.
The reason: companies can only distribute or reinvest what they have left over after deducting their costs – for example for production equipment, raw materials or employee salaries. In addition, these profits have already been taxed by the time they are finally distributed to partners or shareholders. Before the payout, corporation tax (KSt) of 15%, trade tax (GewSt) of 14% on average depending on the company’s registered office and the solidarity contribution have already been transferred to the state treasury. In total, around 30 % was due up to that point, which means that a company can only pay out around 70 % of its profits.
An example: A German stock corporation based in Munich wants to pay out a single-digit million profit to its shareholders. This results in a tax rate of 32.975%. For every 1,000 euros of profit, only 670.25 euros can ultimately be distributed to the shareholders, while 329.75 euros are payable in taxes.
Taxation at company level | |
---|---|
Profit before tax | 1,000.00 euros |
Corporation tax (15%) | 150.00 euros |
Trade tax (3.5 % / 490 %) | 171.50 euros |
Solidarity contribution (5.5 %) | 8.25 euros |
Amount distributed | 670.25 euros |
Tax rate | 32.975% |
Multiple taxation
When this money reaches the shareholder’s account, the final withholding tax of 25% plus 5.5% solidarity surcharge is due, resulting in a further tax burden of 26.375%. If you are a member of the church, you will also have to pay church tax. All this despite the fact that a private investor can only save and invest the money that is left over after deducting his living expenses from his net salary, which he has of course already paid tax on.
Of the EUR 1,000 that a company would like to distribute before tax, not quite EUR 494 ends up in the account and therefore not even half of the original company profit. Based on this, the taxation of dividends is already higher than the top income tax rate and therefore significantly higher than the average taxation of earned income in Germany.
At shareholder level, the taxes are even higher, as the full personal income tax rate applies here, resulting in an additional tax of around 33%. Based on the original profit of 100, this would result in a total tax rate of 63%, which is significantly higher than the top income tax rate. However, even if the partner’s regular earned income is not in the range of the top tax rate, the taxation would be significantly higher than the average rate.
Partnerships and the self-employed in particular have a considerable additional burden.
Taxation at investor level | |
---|---|
Distribution | 670.25 euros |
Withholding tax (25 %) | 167.56 euros |
Solidarity surcharge (5.5 %) | 9.22 euros |
Actual money received | 493.47 euros |
Tax rate | 26.375% |
Total load | Absolute | Percentage |
---|---|---|
Distribution before taxes | 1,000.00 euros | 100.00% |
Taxes at company level | 329.75 euros | 32.975% |
Taxes at investor level | 176.78 euros | 26.375% |
Total charge | 506.53 euros | 50.653% |
Net amount | 493.47 euros | 49.347% |
Small savers in particular are being penalized
In the end, it is not only savers who are being penalized for wanting to provide for their old age and thus actually only want to protect themselves from poverty in old age because the state is not making adequate provision for this, but also companies. In order to expand and create new jobs, they are dependent on profits on the one hand, and on cheap capital on the other, which is provided by shareholders, among others. Shareholders, in turn, take on increased risks due to share price fluctuations. If they are taxed more heavily, the risk-profit ratio is no longer right and they restrict their investments. As a result, companies find it more difficult to raise capital.
In addition, only just under 18% of people over the age of 14 in Germany actually own shares, which means that the number of people affected is very small and the demand would therefore be pure populism. The flat-rate withholding tax already predominantly disadvantages small shareholders with a low income tax rate compared to the half-income system, which was applied until the end of 2008. They would be further penalized by the Left’s proposal.
Delimitation: Interest income
The situation is different for interest income. The criticism here is not entirely unjustified, as there is no additional taxation of profits as with corporations. Strictly speaking, interest income is only passed through. If you make your savings available to a bank so that it can pass the money on as a loan, the income from this is paid by the debtor and represents an interest expense for him.
And as far as the payment of social security contributions is concerned: anyone who earns their living as a private individual will not make any claims to social benefits and will either have private or voluntary statutory health insurance and will therefore be above any contribution assessment ceiling and therefore already pay the maximum rate today.
From a neutral point of view, the demand for “equal taxation” of capital gains and wages must be viewed from both sides. On the dividend side, the tax burden is already at the level of earned income, whereas on the interest income side it could actually be too low. Ultimately, thrift should always be rewarded, especially when it comes to saving for old age, in order to create an incentive to do so; after all, the state and society will save on any social benefits later on by topping them up.
A tax-free retirement savings account, where profits can only be paid out on retirement, remains a very good compromise.
- Elias, Roland (Author)
Letzte Aktualisierung am 2025-02-03 at 10:28 / Affiliate Links / Bilder von der Amazon Product Advertising API