![]() Numerous other items, including gasoline, alcoholic beverages, tobacco products, tea and coffee, carry sales taxes in addition to the Mehrwertsteuer. Medical and insurance services are generally exempt, as are exports of goods abroad and services rendered abroad. A reduced rate of 7% currently applies to certain products, including food and printed material. ![]() It applies to services and goods the standard current rate is 19%. The Mehrwertsteuer assesses a levy on each step in the production and delivery of most items available for purchase. The significant tax is the Mehrwertsteuer (Value Added Tax), which accounts for a quarter of the government’s revenue and is second only to the Lohnsteuer in this regard. In addition to the various types of income tax there is also a series of sales taxes that significantly impact individuals and businesses. Taxes are then assessed based on a sliding scale.Īn “unofficial” tax calculator available online can give you an idea of what your “wage tax” or Lohnsteuer might be. There are a few situations where the taxpayer is required to pay taxes even though the income is less than the personal allowance, especially when tax-exempt income (such as foreign-sourced income) must be considered to determine the applicable income tax rate (progression clause). There may be penalties and interest assessed if the return is filed late. In some circumstances, that date can be extended further to February 28. ![]() If you use the assistance of a tax consultant, your tax filing date is extended to December 31. But, if you may be eligible for a tax refund or have other items that you may want to itemize (deductions or other income or benefits) or if you are self-employed, you need to file a tax return.Īs a rule, the income tax return (Einkommensteuererklärung) should be filed by July 31 of the year following the one in which the income was received. This is because the Lohnsteuer is withheld from the salary. You don’t necessarily need to file a tax return if your only source of income is your employee salary. No payment will be due before receipt of the tax assessment notice.Įvery tax return is under audit therefore if the tax assessment is issued and is not preliminary, the assessment can only be changed in the future by the occurrence of extraordinary circumstances (e. The tax assessment is usually issued by the Finanzamt between two and six months from the date the return is filed. Wage tax withholding and provisional payments are deducted from this total tax liability so that a refund or final tax payment is assessed. The total tax liability is determined by filing an income tax return, which includes all types of income from all sources. The Lohnsteuer is collected at source and paid directly to the Finanzamt tax office) by the employer, while the individual must pay the Einkommensteuer himself.īased primarily on your final payment for the previous year, the Finanzamt will estimate your tax for the current year and require you to make prepayments (Vorauszahlungen) of a quarter of the tax on March 10, June 10, September 10, and December 10. The Lohnsteuer differs from the Einkommensteuer only by the method of collection. self-employment, fees for services, rent collections, investments, and the like) are covered by the Einkommensteuer (income tax). The Lohnsteuer (wage tax), which accounts for a third of the German government’s revenue, is withheld at source from compensation. If an individual is subject to German tax, generally, most sources of income are then taxable. The top 3.5% of earners will continue to pay the total surcharge. In 2021 the “solidarity surcharge” was eliminated for 90% of taxpayers and was reduced for another 6.5% depending on their earnings. In addition, for high earners, there is the “solidarity surcharge” of 5.5% of the tax, to cover the continuing costs of integrating the states of the former East Germany. Incomes over €277,826 for a single person and €555,620 for a married couple are taxed at 45%. Taxable income of less than €10,908 is tax-free for a single person (€21,816 for a married couple). Incomes over €277,826 for a singe person and €555,652 for a married couple were taxed at 45%.įor 2023 the taxable income amounts have increased a bit. Incomes up to €55,960 for a single person (€119,220 for a couple) were then taxed with a rate progressively increasing from 14% to 42%. For 2022 a taxable income of less than €9,984 was tax-free for a single person (€19,968) for a married couple).
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