Introduction to Taxation

As part of the German Corporate Tax Reform 2008, a flat rate tax regime has been introduced from 01/01/2009. This has as result in a fundamental change of the taxation of capital income (interest, dividends, short-term transactions) and capital gains on shares, bonds, certificates, investment funds units and nearly all other financial products.

The withholding tax rate is 25% capital gains tax plus solidarity tax and if applicable church tax. The height of the church tax rate depends on the state in Germany where the customer resides. During the solidarity tax will be added to capital gains tax the church tax rate will reduce the capital gains tax rate.

Whether a calculation and payment of the church tax will be made by the bank is the responsibility of the customer. Only when the customer has given the bank a corresponding order, the church tax can be charged and transferred to tax authority. For customer communities, the bank may only accept an application for transfer of church tax if the members of the community are of the same denomination. An exception is the community like married couples: for spouses, the acceptance of an application to transfer the church tax is also possible in case of different denomination of the spouses.

A tax allowance of 801 Euro (1,602 in case of spouses if they meet the requirements of the joint assessment) and a non-taxability certificate are being considered.

There is no minor income amount for which taxation will not be transact that means any income is taxable, regardless of whether this is a single payment per year, a low absolute or relative amount.

To calculate the tax amounts, Temenos has developed a component with name GBS tax which includes an interface to an external tax calculation system. Additional functionalities like tools for querying and analysis of taxation results make it fully complete.

The TaxEngine meets the reporting requirements for capital gains and interest income reports for both the bank and client side.

• Monthly KEST report
• Yearly FSADV report
• Yearly tax certificate
• Yearly deemed distribution report for accumulating funds
• Yearly loss compensation balance certificate
• KEST certificate of a single transaction

The component GBS tax delivers to the external tax calculation system both the customer data and the taxable interest income. GBS tax in turn requires the calculated tax amounts for the reduction of the gross interest income and the information on the utilization of allowances where this was taken into account in the tax computation. This data must be delivered to GBS tax.

For the outlined data exchange between Temenos Transact and the externally tax calculation system the component GBS Tax provides an automated data interface which ensures that the workload for administration is kept to the minimum. In addition, queries and appropriate tools will keep the safety and reliability of the data exchange.

This user guide describes in detail the functioning of the interface and the necessary steps and controls to be observed on the part of Temenos Transact. All activities that relate to the external tax calculation system are given in the descriptions of the respective manufacturer.