[Inclosure in No. 109.
—Translation.]
Mr. von Bülow to
Mr. Everett.
The undersigned has the honor to state, in reply to the respected note of
March 8 of Mr. H. Sidney Everett, chargé d’affaires of the United States
of America, that the taxation of railroads and railroad bonds has as yet
not been uniformly regulated in Germany, but that, on the contrary, it
varies in the different German states.
Since, of all the states in question, Prussia alone possesses private
railroads of considerable extent, the undersigned, in transmitting the
desired information, thought proper to confine himself to the
regulations in force in Prussia.
A more detailed review of the above will be found in the memorial
inclosed, and respectfully placed at the disposal of Mr. Everett by the
undersigned, who also takes this occasion to renew the assurance of his
most distinguished consideration.
- von BÜLOW.
- H. Sidney Everett,
Chargé d’Affaires of the United States of
America.
[Translation of the memorial accompanying
the foregoing inclosure.]
Memorial concerning the taxation of railroads in
Prussia.
i.—state taxes.
It was already prescribed by the law of November 3, 1838, concerning
railroad enterprises (§ 38), that railroads were to pay a tax, the
regulating of which was, however, reserved for a later period. The law
at the same time provided “that railroad companies should remain free
from license taxes (Gewerbesteuer).” § 38.
The introduction of the tax provided for ensued through the law of May
30, 1853, concerning the tax to be paid by railroads. Pursuant to the
same, railroads are required to pay the state a percentage of their
annual net receipts. Details will be found in §§ 3 and ff.
On March 16, 1867, a law was passed concerning the taxation of all
railroads not owned by the state or by home railroad stock companies,
the provisions of which are in unison with those of May 30, 1853.
Railroad bonds are not taxed as such by the state, but are subject, like
all other evidences of indebtedness, to a single stamp tax, the proceeds
of which flow into the state treasury.
ii.—other than state taxes.
The question as to whether, and to what extent, railroads and railroad
bonds may be taxed by municipalities, circuits, and other communal
associations, is not settled in Prussia by any legislative
provisions.
The answer to this question depends rather, as railroads belong either to
the state or to stock companies, upon the provisions which obtain as
regards communal taxation of the fisc and of stock companies, which are
different in different parts of the country. To the six questions
contained in the esteemed note of the 8th ultimo, an answer applying
uniformly to the whole state can only be given with reference to the
following points:
- (To 2.) In so far as the realty of railroads is subject to the
State realty or buildings tax, which is not the case as regards
the road-beds, the same are required to pay the taxes on realty
imposed on the municipal and other communal associations in
particular, with additions to the State realty and buildings
tax.
- (To 3.) As in Prussia, municipal and circuit taxes are nowhere
levied in the form of a property tax, there is no distinct
taxation of railroads as owners of personalty.
- (To 4.) Railroads are only entitled to immunity from taxation
as regards road-beds in so far as it is a question of the
levying of communal real-estate taxes. (Compare with “To
2.”)
- As regards the unjustifiable imposition of a communal
income-tax upon them, more particular information will be
furnished under “To 6.”
- (To 5.) The stock belonging as well as the dividends accruing
to holders are everywhere subject as their personalty to the
income tax of municipalities, circuits, &c. The right of
deduction is also not at present conceded to holders in those
municipalities in which a railroad as such is subjected to an
income tax.
- The interest accruing to owners of railroad bonds is taxed as
their personal property, in the same manner as the dividends of
the stockholders; a tax upon the bonds as such is nowhere
imposed.
- (To 6 and. 1.) Communal and district taxes are nowhere imposed
on gross receipts. In cases in which
income taxation is imposed on railroads at all, the net receipts alone-are regardedas subject
to taxation.
The surplus of the annual revenues over and above the annual expenditures
is considered the net receipts; as expenditures, are regarded also the
customary annual loss by use of buildings, utensils, &c. Further,
the necessary additions to the renovation fund, as well as the amounts
expended to pay interest on debts and commissions to officers and
members of the supervision and ministerial councils, but not the amounts
added to the capital reserve fund, or used for improvements, &c., or
enlargements of buildings.
Such taxation of the net receipts of railroads, however, only takes place
on the-basis of the special provisions contained in the regulations of
the respective city and rural communities in the city-communities of the
provinces of East and West Prussia, Brandenburg, Pomerania, Silesia,
Saxony, Sleswic-Holsatia, Westphalia, and Ehineland, in the city of
Frankfort-on-the-Main; and as regards private railways in the city
communities of the province of Hanover, than in the rural communities of
the provinces of Westphalia and Ehineland, and, further, on the basis
of§ 14 of the circuit regulation of December 13, 1872, as regards the
private railroads in the circuits in the provinces of East and West
Prussia, Brandenburg, Pomerania, Silesia, and Saxony.
As entitled to tax are regarded only those communities and circuits in
which there is a station, and not those communities through which the
road merely lies.
The apportionment of the entire net receipts of the railroads among the
individual communities and circuits entitled to tax is based on the
proportion of the gross, receipts of the individual stations (internal
business) to the entire gross receipts.
