Taxation of free float dividends is constitutional

The fact that dividend income is only disregarded for corporate income tax purposes if the shareholding is at least 10 % is not constitutionally objectionable.

Dividends distributed to a corporation are exempt from corporate income tax and trade tax only if the shareholding in the distributing company amounts to at least 10 % of the share capital. Dividends from smaller shareholdings (free float dividends), on the other hand, are subject to tax. However, the Federal Fiscal Court considers this unequal treatment to be constitutional: the tax exemption of income from larger shareholdings is primarily a consequence of EU law. However, according to the Federal Fiscal Court, this does not imply an obligation on the part of the German legislator to exempt all income from investments from tax.