Germany - Tax report

The German financial year sensibly follows the calendar year (although companies can choose the month they wish to submit their annual tax return). The general tax declaration "Lohnsteuer-Anmeldung" is due to be filed by the 31st of May the following year. If you have a tax advisor, then this deadline can be extended to the end of September, and the tax advisor "Lohnsteuer Berater" files on your behalf. Many Germans have their tax done through a tax advisor. Due to tax treaty laws, it is also a good idea for expats to have someone who knows what they're doing file their tax declaration for them.

The figures below are for the year 2000:

Single taxpayers:
a zero tax rate on taxable income up to 7,235 euros
a marginal tax rate rising form 19.9% to 23% on taxable income between 7,236 and 9,251 euros
a marginal tax rate rising from 23% to 48.5% on taxable income between 9,252 and 55,007 euros
a marginal tax rate of 48.5% on taxable income over 55,007 euros

Married taxpayers:
a zero tax rate on combined taxable income up to 14,470 euros
a marginal tax rate rising from 19.9% to 23% on taxable income between 14,472 and 18,502 euros
a marginal tax rate rising from 23% to 48.5% on taxable income between 18,504 and 110,014 euros
a marginal tax rate of 48.5% on taxable income over 110,014 euros.

It is generally more beneficial for a married couple to file their tax declarations together. Although the tax office is divided into separate departments based on the initial of your surname, the forms must be submitted to the husband's tax office, even if the woman has a different surname. The tax rate is marginalised, meaning you pay tax at a different rate depending on the amount of money you earn.

You need to submit a tax declaration if your income is above 7,271 euros, or if you are married and you and your spouse's combined income exceeds 14,543 euros. You must also submit a tax declaration if you earn over 410 euros from a secondary source of income, and if the Finanzamt (Tax office) requests that you fill in a tax declaration.

If you are self-employed then you may have to submit additional tax forms either monthly, or quarterly, depending on how much income you earn. Self-employed people may also make deductions of goods they purchase for their work, including transport costs. If your job involves you performing a 'service', then 16% of the service charge must be paid as service tax. If you earn less than 512 euros service tax each year, then you are exempt from paying it. If you earn less than 6,316 euros service tax a year, then you can submit your "Umsatzsteuer-Anmeldung" quarterly, otherwise you must submit it monthly. The deadline is the 10th of the following month.

If you are required to contribute to the German social security system, the contributions are calculated as a percentage of your income, up to a maximum amount. Half of the contribution is payable by your employer, the other half by you.
The current rates for German social security contributions are:
· Retirement Insurance: 19.3% of your monthly salary but not on the part of the salary which exceeds 4,300 euros.
· Public Health Insurance (if you do not earn enough to have private insurance, see 'Health Insurance'): around 13.1%, but not on the part of your monthly salary which exceeds 3,225 euros.
· Long-Term Care Insurance: 1.7% of your gross salary, capped at 56 euros per month.
· Unemployment Insurance: 6.5% of your gross salary, capped at 280 euros per month.

In addition to income tax, there is a general goods and services tax of 16%. Most receipts break the final figure down into the net amount before tax, the tax, and the final total. You cannot claim a refund for this tax from your income tax (unless you are self-employed and bought the product for work.)

Capital gains tax is also applicable to certain investments, including real estate. The sale of non-business assets are generally exempt from capital gains tax unless they are considered to be speculative. Capital gains are considered speculative when, in the case of real estate, the sale occurs within 10 years of acquisition and, in most other cases, within one year of acquisition. Furthermore, capital gains derived from the sale of a substantial stake in a company (more than 10%) are also taxable. Capital gains are taxable at the same rate as personal income.

Both Lohnsteuer-Anmeldung and Umsatzsteuer-Anmeldung are sent to the Finanzamt.