Dividend taxation methods

1. Dividend taxation methods

CFA Level 2. Corporate Finance. Reading 25
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2. 3 systems of taxation that affect dividends

• Double-taxation system
• Dividend imputation tax system
• Split rate tax system

3. Double taxation

• Dividends taxed at individual and corporate level
• Countries : Germany, USA

4. Dividend imputation (full imputation)

• Individual tax rate = effective tax rate
• Countries: Australia, New Zealand

5. Split rate

• Different taxes on corporate level for Retained earnings and Dividends
• Countries: only historical importance

6. No personal taxation of dividends

• No taxation on personal level
• Countries: Greece, Slovakia
• Corporate tax rate = effective tax rate