The Corporate Tax Reform Act of 2008 fundamentally reformed the taxation of private capital income. While previously all income was treated equally under the synthetic income tax system, capital income now receives special treatment and is subject to a specific flat tax.

This paper first outlines the fundamental principles of income tax law. It then critically assesses the detailed regulations of the flat tax in light of these foundational principles and examines their conformity with the system. In addition to the question of whether a special rate for capital income represents a free legislative decision, the study particularly investigates the limitations on the deduction of expenses, the restrictions on loss offsetting, and the constraints on the subjective net principle. Furthermore, it analyzes the unsystematic differentiations within capital income and questions whether a non-systematic taxation can be justified. Relevant case law is also taken into account.