Dividends: proportional allowance cut from 50% to 40% and fixed allowance raised to €1,525 / €3,050

As part of the income tax reform in the 2006 Finance Act, which builds the 20% allowance into the tax scale, Article 76 adjusts the taxation of dividends, which did not benefit from that allowance. The proportional allowance on distributed income falls from 50% to 40%: dividends are taxed on 60% of their amount. The fixed annual allowance rises from €1,220 to €1,525 for a single person and from €2,440 to €3,050 for a jointly taxed couple. The capped 50% tax credit on dividends is kept. These rules apply to income received in 2006, declared and taxed in 2007, hence the effective date of 1 January 2007.