Income Tax in Germany
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Income Tax in Germany is imposed by the government of Germany on the income of the citizens. The tax rates vary and they depend on the amount of income. The rate of income tax is directly proportional to the increasing income.The rate of income tax in Germany in the year 2007 ranges between 15-45% of the income, for an individual. Only those people fall under the category of tax payers whose minimum income is €250,000 and who are single. In case of a couple, the minimum incomes should sum up to €5000, 000 to be taxable. In Germany, laws require that one should pay the income tax before paying the solidarity tax.
The income tax in Germany is normally paid by 31st of May at the tax office for the following year. If one wants to extend the date of tax payment then he/she has to seek help from a tax advisor. One has to appear with relevant reasons as to why he/she could not file the tax in time, otherwise he/she would be liable to pay a penalty.
Both the residents and the non-residents are liable to pay income tax in Germany if the person’s source of income lies in Germany. An employee rendering services against his wage or remuneration as well as a self-employed person is liable to pay income tax in Germany. In order to be registered as a German employee one should apply for the wage tax card in Germany. The wage tax is added to the income tax which is paid on an annual basis by an employee.
The Calculation of Income Tax in Germany
The calculation of income tax is done on the taxable income of the employee. The taxable income is equal to the amount which is derived after subtracting special incomes like child allowance and others; from the actual income of the employee.
However, it should be remembered that for partnerships there are no separate rules for income tax. In case of partnerships the income of the partners are divided by the number of partners and the partners then pay their income taxes based on the amount of income. In case of an income earned in a form of a wage the employer is liable to subtract the tax payable from the income of the earner on a monthly basis.
Corporate Income Tax
The actual rate of corporate income tax in Germany is fixed at 25%. Moreover, the business house must pay the business tax to the municipality. However, a business concern whose employees are scattered in various cities pay the business tax according to the number of employees working in the various branches of that company.
