• Tell a friend
• Print
• Share
  • Twitter
  • Facebook
  • XING
  • LinkedIn
  • Mister Wong

Tax Liability

a) limited tax liability - without residence in Germany

- only the income in Germany (domestic-source income) is taxed
- deduction of business expenses / professional expenses as far as expenses are related to the domestic-source income
- tax rate at least 25%

b) unlimited tax liability: - residence in Germany

- the world wide income from all sources (domestic and foreign sources) is taxed
- all deductions from income are possible as far as they apply to personal requirements

Tax Rates (Singles)

basic exempt amount from tax 2006 ? 7,664.--
minimum tax rate 2006 15.0 %
maximum tax rate 2006 42.0 % starting from ? 52,152.--

basic exempt amount from tax 2007 ? 7,664.--
minimum tax rate 2007 15.0 %
maximum tax rate 2007 42.0 % starting from ? 52,152--
surplus tax rate 2007 45.0% only for the ? 250,000.-- exceeding amount

Tax Rates (Married)

basic exempt amount from tax 2006 ? 15,329.--
minimum tax rate 2006 15.0 %
maximum tax rate 2006 42.0 % starting from ? 104,304.--

basic exempt amount from tax 2007 ? 15,329,--
minimum tax rate 2007 15.0 %
maximum tax rate 2007 42.0 % starting from ? 104,304.--
surplus tax rate 2007 45.% only for the ? 500,000.-- exceeding amount

Professional Expenses Deduction (Schedule N)

travel between residence and job (line 32 - 39)

2006

? 0.30 for every driven kilometer commencing with the 21st kilometer
Maximum amount ? 4,500.-- / year
plus accident costs

2007

? 0.30 for every driven kilometer commencing with the 21st kilometer
Maximum amount ? 4,500.-- / Year
plus accident costs

working equipment (line 42 - 44)

professional clothes, cleaning of professional clothes, professional magazines,
purchase expenses for items which are necessary for employment

bank account charges (line 46 - 48)

? 15.-- per year; no supporting documentation required

 

Travel Expenses

car: ? 0.30 for every driven kilometer or actual expenses for meals:

8 - 14 h ? 6.--
14 - 24 h ? 12.--
over 24 h ? 24.--

accommodation, postage, telephone, depositing of luggage, parking

 

Relocation Expenses

double housekeeping (line 52 - 63)

first and last home trip ? 0.30 / km
home trip once per week

2006: ? 0.30 / km for the first 3 months
2007: ? 0.30 / km for the first 3 months

accommodation
meal lump sum for the first 3 months ? 24.-- per day
expense of moving

home office (line 45)

maximum exempt amount of ? 1,250.-- per year possible if
- room is used more than 50 % for profession
- the employer does not make a working place available

Expenses for fittings are unlimitedly tax deductible.

expenses for further professional training (line 45 - 48)

all expenses for the professional training for the present employment are deductible.

costs for job applications are deductible (line 45 - 48)

union dues (line 40)

without supporting documents the Government is excepting maximum flat rates as tax exempt amounts:

2006: ? 1,044.--
2007: ? 920.--

Special Personal Deductions (Form EST 1 A Page 3)

insurance (line 63 - 71)

all insurances at home and abroad are deductible except: comprehensive coverage for cars, household insurance, legal charges.

pensions and constant charges (line 73)

in the event of special reasons for obligations e.g. support for parents based on inheritance of a house, no legal transaction (contract)

alimony for divorced marriage partners (line 77)

2006 / 2007 deductible up to ? 13,805.-- per year

The former marriage partner has to consider the amount as taxable income.

church tax ( line 78 )

expenses for tax advisors (line 79)

invoice has to be split up to relating income sources

expenses for the own professional training but not related to the present employment (line 81 ? 82)

2006 deductible up to ? 4,000.--
2007 deductible up to ? 4,000.--

donations (line 86 - 90)

charity, religious purposes up to 5% of income; scientific,
cultural purposes up to 10% of income are deductible.

donations for political parties are deductible directly
from taxes up to ? 825.-- unmarried, ? 1,650.-- married

school fees (schedule child)

30% of the school fees are deductible.
Accommodation and boarding are not deductible.

Extraordinary Financial Burdens (Form EST 1 A Page 4) (line 95 ? 99)

handicapped exempt amount starting from 25 % to 100 % disability
(line 95 - 98)

Lump sums without supporting documentation from ? 310.-- to
? 1,420.-- are deductible per year.

For blinds and heavily handicapped ? 3,700.? are deductible per year. Supporting documentation from the pension office is necessary. Transfer of the exempt amount is possible.

household help (line 99 - 100)

? if you or your marriage partner is at least 60 years old ? 624,--
? if you or your marriage partner or one of your children is heavily handicapped or had been severely sick ? 924,--

accommodation in a home and nursing home (line 102 - 104)

old age home or nursing home ? 624.-- or ? 924.-- per year if the care is permanent

nursing lump sum (line 104 - 105)

? 924.-- per year are deductible, if you take care of a helpless person in your residence and do not receive any income.

alimony for needy persons for whom you do not receive children allowance deductible are:

2006 up to ? 7,680.-- per person / p. a.
2007 up to ? 7,680.-- per person / p. a.

taken into account is your own income, income of the needy person if this exceeds ? 624.-- per year.

- other extraordinary expenses (line 116 - 120)

- funeral expenses except mourning clothes, travel expenses to the funeral, entertainment

- marriage divorce expenses only legal cost and lawyers charges

- expenses for car for handicapped if disability grade is at least 70%

- expenses for illness if not paid for by health insurance

- expenses for cure if necessity of cure is certified by public health officer

- nursing expenses emerging from ambulatory care or care in a nursing home

Children

education exempt amount (line 42 - 44)

under 18 years over 18 years lodging abroad

? 0.-- ? 924.--

tax exempt amount for children (line 44 - 49)

? 1,824.-- for single
? 3,648.-- for married

expenses for care of children at home (line 39 - 43)

? 1,000.-- are deductible

- if the child is not older than 14 years old
- if the child is handicapped not older than 27 year old

household expenses exempt amount from tax (line 50 - 55)

For single person household, if one child is registered in his/her
residence in Germany, ? 1,308.? are deductible per year in 2004.

Government Social Securities 2007

Insurance	Up to monthly gross salary	Up to yearly gross salary	Total % for employee and employer
Health Insurance	? 3,562.50.--	? 42,750.--	between 12.8 ? 14.2 %
Special care	? 3,562.50.--	? 42,750.--	1.7 %
Retirement Ins.	? 5,250.--	? 63,000.--	19.5 %
Unemployment Ins	? 5,250.--	? 63,800.--	6.5 %

 

The employer has the obligation to register his employees for a legal accident insurance for which he has to cover the complete insurance contribution.

 

 

Government Social Securities 2006

Insurance	Up to monthly gross salary	Up to yearly gross salary	Total % for employee and employer
Health Insurance	? 3,562.50.--	? 42,750.--	between 12.8 ? 14.2 %
Special care	? 3,562.50.--	? 42,750.--	1.7 %
Retirement Ins.	? 5,250.--	? 63,000.--	19.5 %
Unemployment Ins	? 5,250.--	? 63,800.--	6.5 %

 

The employer has the obligation to register his employees for a legal accident insurance for which he has to cover the complete insurance contribution.