On 23 February 2017, the Federal Council's Finance Committee approved Brandenburg's motion to abolish the flat-rate withholding tax. According to this motion, the Bundesrat should campaign for the abolition of the flat-rate withholding tax and call on the Federal Government to take action.
This means that the initiative launched by the state of Brandenburg on 27 October 2016 has cleared another hurdle. We already wrote about this in our blog from 11 November 2016 "Considerations on the requested abolition of the flat-rate withholding tax" and called for a well-founded analysis of this reform proposal. Should the plenary session of the Bundesrat now also vote in favour of this motion, the Federal Government will then be asked to comment.
This motion (BR-Drs. 643/16) ignores the fact that the long-prepared introduction of the flat-rate withholding tax in 2009 was by no means justified solely by the fight against tax evasion, but that there were many other arguments in favour of flat-rate taxation with an income tax rate of 25% (see our blog from 11/11/2016).
It should also be emphasised that this application requires the following points to be examined and investigated:
- New regulation of the taxation of corporations and their distributed profits as a condition for a change in the law
- Securities disposal gains to continue to be treated as taxable without speculation period
- Re-introduction of the deduction of income-related expenses for investment income
