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Requirements for the partial income method option
After an effective first-time application, the partial income method must also be applied in the following four years, even if the requirements have ceased to apply in the meantime.
Under certain conditions, the partial income method can be chosen instead of the flat-rate withholding tax for income from an investment in a corporation. According to the law, the application for the partial income method also applies to the following four assessment periods - as long as it is not revoked - without having to prove the application requirements again. The Federal Fiscal Court has now clarified that the tax office must assume that the application requirements are met in the following four assessment periods, even if these have ceased to apply in the meantime.
The tax authorities wanted the regulation to be understood in such a way that the tax office merely waives the requirement to constantly prove the conditions, but can refuse the partial income procedure in a later calendar year if the conditions have ceased to apply in the meantime. In contrast, the Federal Fiscal Court believes that this interpretation by the tax office is not covered by the explanatory memorandum and the context of the regulation.