cultural difference 21: taxes

May 11, 2010

Mai is the month when Germans need to file their tax declarations, so I thought I would blog about taxes in Germany.

German tax laws are complicated (some people refer to it as a “jungle”), so I don’t pretend to understand it all. Due to many complicated rules and exceptions, tax consultants probably have the most secure jobs in Germany. 🙂

First, we have Mehrwertsteuer, which is known as VAT in the UK and sales tax in the US. Most goods and services have a sales tax of 19%. Food articles, printed material such as books (yay!), and some public transportation have a reduced tax rate of 7%. Sales tax is already included in the list prices in stores.

Our income tax is generally higher than in the US or the UK. Depending on your income, your income tax can be up to 45%.

Then there’s the “solidarity surcharge” of 5.5% of the income tax. It was established to cover costs of rebuilding East Germany after the reunification.

We also have a church tax. If you are Catholic or Protestant (Evangelic), you pay an additional 8-9% of your income tax to the church. Some Germans leave the church to avoid paying the tax.

A friend recently asked me if there’s really an entertainment tax for radio and television in Germany. Well, not really, but what she meant was the fees we pay for receiving radio/television broadcasts (“Rundfunkgebuehren”). If you have a radio or a television in your household (or in your car!), you have to pay a monthly fee, which amounts to over 200 € per year. By the way, this is not for cable TV.

So, what do you think is more complicated? The German tax system or the trash-sorting system? 🙂


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