The subject of taxes in Germany is a very complex subject because of the many types of taxes imposed by the state on its population, whether citizens or residents, and the Federal Germany is a tax state because every resident is obliged to pay taxes imposed by the government in addition to that these taxes are the main source of revenue for the German government and these taxes collected by the government of the state are used as the basis for Germany’s financial budget, where these taxes are used in matters of maintenance, road services, universities, police and other services of the state. These taxes are subject to Germany’s tax law and Germany’s Federal Finance Authority is not responsible for collecting or collecting taxes.
Taxes in Germany
The types of taxes in Germany are divided into
• Direct taxes:
It is a tax that cannot be paid by anyone, i.e. taxpayers and tax holders are the same people.
• Indirect taxes:
Unlike direct taxes where anyone can pay that tax under the guidance of the tax holder.
Types of taxes in Germany
1. Income Tax:
It is the tax that is paid when earning money, such as the monthly payroll tax for a job, and the company itself must pay tax when making profits for it. The categories of entrepreneurs who work for themselves, doctors, for example, who have private clinics, and lawyers who work for them within their private offices and who pay tax because of their profession, these taxes fall into these categories within the income tax, and these categories must submit an annual tax return that can be issued online or filled out manually for Printed tax form route. The income tax system is a progressive system where the tax rate varies from one individual to another according to his income, and if the annual income of the individual is less than 9000 euros, he is exempted from income tax.
2. Payroll Income Tax
This tax is paid by the employer as this type of tax applies in Germany to employees and accordingly employees do not file tax returns.
3. Dog Tax
This tax applies to dog owners only and varies between the countryside and the city, and it is a type of tax found in all regions of Germany and each city or region can decide to impose a dog tax independently in addition to determining its amount according to the type and breed of these dogs. In the city, the dog tax can be from 65 to 186 euros. While in the countryside this tax can be from 5 to 40 euros per year, and if they invest dogs for breeding and sale, then the investor does not have to pay this tax.
4. Excise Tax
It is similar to sales tax, which is the excise tax, as it is not paid separately, but always comes with sales tax, and there are some goods that are subject to excise tax, such as alcohol. Tobacco and cigarettes . Beer . Gasoline and mineral fuel. Coffee .
5. Car Tax
You must pay the car tax if you own a car, truck or motorcycle, so when buying a car or other of the above, it must be registered and registration can be done in the office of your municipality or the area in which you live, and this tax is canceled if you cancel the registration.
6. Church Tax
If you belong to the church community, you have to pay the church tax, and this tax is provided to those who profess Protestantism, Catholicism and some other religions. This type of tax in Germany is the main source of income, the higher your salary, the higher the church tax, except if you do not go to church or your income is less than 9000 euros, then you do not have to pay church tax.
7. Inheritance Tax
This tax is paid by every person who obtains property from an inheritance or as a gift and has a certain rate, and the rate of this tax in Germany ranges from 7 to 50%.
8. Trade and Business Tax
If you establish your own business, you must pay the trade and business tax, this tax is of great importance to many self-employed workers, and the trade and business tax is one of the most important sources of income for municipalities, as this tax is considered as a reward paid by companies to municipalities for repairing roads, building municipalities, establishing parking spaces, or providing infrastructure that benefits companies.
9. Value Added Tax (VAT)
It is the sales tax payable on purchases. For example, when you shop, the state gets money by paying the store a sales tax to the state for the purchases that you marketed and paid the store for.
The size of the value-added tax in Germany is 19% (reduced rate 7%), which is added to the prices of goods or services and paid by the customer.
10. Taxes for students, retirees and the unemployed
For retirees, if the income exceeds the amount of the basic tax exemption, then a tax must be paid, as well as for students, if you do not earn more than 450 euros per month, you will remain exempt from tax. Unemployment benefits are also tax-free.
Tax categories in Germany
The tax rate in Germany ranges from 14 to 54% and the amount of payroll tax is determined according to the tax categories in which you are assigned according to your situation, which is divided into:
• First tax category:
Includes non-employee individuals who are unmarried, divorced, widowed or living separately.
• Second tax category:
Single parents who live with their child in an apartment have types of taxes and are unmarried and entitled to support.You will not be classified as such unless you are registered in this category in the previous year, otherwise you must apply for this tax category to the tax office.
• Third tax category:
It shall be applied to widows from the year of the husband’s death and the following year. Married people can choose this category if the partner is unemployed or earns much less.
• Fourth tax category:
It is a specialized standard tax category for couples. You have to register the marriage to be automatically assigned to this category.
• Fifth tax category:
Similar to the third tax category, married persons or same-sex partnerships.
• Sixth tax category:
You are assigned to this category if you have other jobs in addition to your primary job.
Note : Freelancers and individual entrepreneurs do not have to pay payroll tax, only income tax, so they do not belong to payroll tax categories, but if you are self-employed, tax categories can be good for you if the spouse is employed.
Tax exempt in Germany
There are many tax incentives and tax exempt for families in Germany including:
• Child care allowance
• Childcare and education costs
• Lump sum care allowance for those who care for their relatives.
The subject of taxes in Germany is a very complex topic, but in this article we have provided you with the most important types of taxes and a glimpse of exemption and tax categories, which is a shortcut to things that may interest you to know.
Finally, dear reader, everyone who has a place of residence in Germany is obliged to pay taxes, and the matter applies to residents and refugees. Tax evasion when the due taxes are not paid or manipulated with the tax office is punishable by law by paying fines and may even lead to imprisonment. Therefore, every individual living in a country must respect its laws and regulations and apply them appropriately in order not to be subjected to legal accountability.