Germany Tax system

JIG World helps you keep track of the complex tax system in Germany!

Germany has a comprehensive tax system that helps to finance the state, support the social security system and provide public services. It includes taxes on income, consumption and property that apply to both individuals and companies.

          1. income tax
          Income tax is one of the main sources of revenue for the German state.
          This is a progressive tax in which the tax rate increases as the tax rate rises.
          income increases.  

          - An employee with a gross annual income of € 30,000 pays an average annual salary of € 30,000. 
            Tax rate of around 20 %.

          - With an income of € 80,000, the average tax rate rises to around 35 %.
            Self-employed persons must calculate their income tax themselves and
            make quarterly advance payments.

              2.value added tax (VAT)
            VAT is levied on almost all goods and services.
            -  There are two sets:
            - The regular rate of 19 % (e.g. for electronics, clothing). 
            - A reduced rate of 7 % (e.g. for food, books).
            - If you buy a television for €1,000, €190 will be deducted from the VAT.
            - A packet of bread for €3 only contains €0.21 VAT.

3. corporate income tax
- Corporations such as GmbHs or stock corporations pay corporation tax on their profits.
- A GmbH with an annual profit of € 100,000 pays corporation tax of € 15,000. 
- Added to this is the trade tax, which can vary between % 7 and % 17 depending on the municipality.

5. property taxes
 These include several types of tax levied on asset transfers or real estate ownership.

- Inheritance tax: Someone inherits a house worth €500,000. With an allowance of €400,000, inheritance tax must be paid on the remaining €100,000.

- Property tax: A homeowner pays annual property tax, which varies depending on the municipality and the value of the property.