Surcharge 2: Church tax (where appropriate)
In order to make it easier for employers to calculate the tax, employees are classified in different tax classes. Furthermore, the allowances and flat-rate deductions that must be granted by law are normally taken into account. These are the wage or salary earner’s standard allowance, which currently stands at €1,000 a year, (for tax classes I to V), the flat-rate allowance for special expenses, which is €36 a year (for tax classes I to V), the flat-rate allowance for provident expenses (available to tax classes I to VI), and the allowance for single parents of €1,308 a year (for tax class II).
The tax classes are arranged as follows:
- Class I: single employees, as well as married, widowed or divorced employees and employees who are in a civil partnership (1) or who were previously in a now-dissolved civil partnership (1) who do not meet the requirements for assignment to Class III or Class IV.
- Class II: employees as described in Class I, but who are entitled to the relief amount for single parents. This relief amount may be claimed by employees who are single, if at least one member of their household is a child for whom the employee in question is entitled to a tax-free allowance or child benefit. It is assumed that a child belongs to the household if that child is registered at the residence of the single taxpayer. Taxpayers are classed as single if they do not live in a joint household with another adult and
a) do not meet the requirements for applying the splitting method or
b) are widowed.
- Class III: married employees/employees in a civil partnership (1) who are not permanently separated and are subject to unlimited income tax liability and a) whose spouse/civil partner (1) does not receive income from dependent personal services, or b) whose spouse/civil partner (1) has been assigned to Class V following application by both spouses/civil partners (1) . Widowed employees if they and their deceased spouse were subject to unlimited income tax liability at the time of the spouse’s death and were not permanently separated at that time (however, this only applies to the calendar year following that of the spouse’s death).
- Class IV: employees who are married or in a civil partnership (1), if both they and their spouse/civil partner (1) are subject to unlimited tax liability and are not permanently separated, provided that the employee’s spouse/civil partner (1) also receives income from dependent personal services.
- Class V: Employees as described in Class IV, if the employee’s spouse/civil partner (1) is assigned to Class III following application by both spouses/civil partners (1).
- Class VI: applies to employees who receive income for dependent personal services from more than one employer concurrently; this class is used to withhold wages tax on the income from the second employment relationship and any further employment relationships.
From the calendar year 2010 onwards, spouses/civil partners (1) receiving income from dependent personal services have an extra option as regards each of their tax classes. In addition to the previously existing combinations (of Class IV for both partners, or Class III for one and Class V for the other) spouses/civil partners (1) may choose the tax class combination IV and IV in conjunction with a specially calculated multiplying factor. This factor-based option is a means of ensuring that the relevant tax relief provisions (in particular the basic personal allowance) are taken into account when withholding wages tax from each spouse’s/civil partner's (1) income. The factor also takes into the account the tax-reducing effect of the income-splitting method when wages tax is withheld.
(1) within the meaning of the Civil Partnership Act (Lebenspartnerschaftsgesetz - LPartG) of 16 February 2001 (Federal Law Gazette I, page 266)