Taxes are a source of revenue for the government. The revenue is important as it contributes to the money that the government put together to meet the security and infrastructural needs of the company among others. The security needs of the company include being able to protect its territory from internal and external aggressions as well as providing a peaceful environment where the citizens can confidently carry out their daily activities without the fear of bodily injury, death, or damage of their property (both home and work) from people that could include terrorists, criminals or representative from other countries (especially enemy countries).
If you reside in Germany and you want to patronize any company either as an individual or as a company, you should read customer reviews about the company as left for them by people resident in Germany on reviewsbird.de. For instance, you will have to patronize German telecom services and financial institutions amongst several other types of businesses.
There are 3 major different types of taxes in Germany. The 3 major types of taxes are discussed subsequently.
This type of tax applies mostly to individuals who could be employees, self-employed including freelancers, and entrepreneurs. You will be required to pay a percentage of what you earn to the German government as tax. Fortunately, tax in Germany is designed such that it is very considerate. It is considerate of what you earn and you are likely not to pay any tax if you earn very low yearly. Furthermore, there is the opportunity to file for tax returns at the end of the year, with the average tax returns paid by the German government yearly to its citizens standing at 1020 euros.
If you are an employee, your employer is expected to deduct your income tax from your salary and pay directly to the government. The personal tax ID number is also known as Steuer ID represents your identification number. It is unique to you and the tax office (Finanzamt) uses it to identify you. If you should lose your tax ID, you can retrieve it by going to the tax office to request it. Your tax ID could also change based on factors that could include relocating from one address to the other or changing marital status from single to married.
The incomes that are taxable in Germany include rental income, annuities, alimony, gains from private transactions, income from royalties, independent personal services, employment including past employment compensations, income from capital investment, agriculture and forestry as well as trade or business income.
For income tax, you are not expected to pay for the first few euros you make in a year, which changes by year. For instance, in 2019 it was 9,169 euros while in 2020 it was 9,409 euros. The implication is that in 2020, your taxable income will start from other amounts you earn after you have earned 9,409 euros. Your income tax will now start from 1 per cent and could extend to 45 per cent of your income at most. The higher you earn, the higher the percentage of income you earn. Hence people earning low pay lower percentage while those who make much more pay higher percentages.
The corporate tax is the tax paid by organizations and business owners for their business. The corporate tax stands at 15 per cent of the profit made by the organization.
The solidarity tax is a 5.5 per cent tax that both individuals and organizations have to pay in addition to their income and corporate tax respectively. It is capped at 5.5 per cent and is also not charged for the first few euros earned by an individual or double the amount for a couple as specified for the year.