Tax

In Germany there are different types of taxes, such as income tax, business tax or turnover tax. They are the main source of income for the state, upon which the expenditure of public welfare is depended – such as social security, education, health, or transport infrastructure. The German tax system is based on efficiency, transparency and fairness.

Efficiency

To measure the capacity of the individual to earn, the conditions are very important: equal income, equal tax burden; different incomes, different income tax. As a result, people with lower incomes pay less taxes and better earners are taxed higher.

The individual pays taxes only if he is able to do so. Therefore, there is a tax-free subsistence minimum – only those who earn more than 9,168 euros per year pay taxes. The subsistence minimum of children must also not be taxed. The State grants parents a tax allowance of EUR 7,620 per year for their children.

Income tax (for almost everyone)

In Germany, anyone who earns more than 9.168 euros annually has to pay a share of it to the state. This will ensure that everyone contributes their part to the community. Employees must pay income tax in the same way as pensioners or the self-employed.

Levels of tax rate

The income tax is based on the income capacity according to the 'linear-progressive rate'. It means that tax rates are decided by different tax rates levels. In short, the higher the income, the more percentage of tax.

Gross and net salary

The income tax Employees are shown Employees’ payroll, and it is a prepayment. Employees are classified in tax brackets. The individual situation of a taxpayer, for example, single or with a family, is already taken into account.

The employer retains income tax and social security contributions from the gross salary and pays them to the tax office before paying the net salary to his employees. At the end of the year, taxpayers can file a tax return, and they will receive overpaid taxes back from the tax office.