Tax exemption

An allowance is an amount that reduces the tax base. In contrast to the free boundary must be in excess of the free allowance not all of the income will be taxed, but only of the allowance in excess of the revenue. The German tax law provides numerous exemptions that have been introduced partly for social reasons, and partly serve to simplify the taxation process.

Allowances in German tax law

The main allowances under German tax law are:

Income Tax

  • Basic allowance: As a basic allowance is the amount up to which no income tax is levied. It is part of the income tax rate. In the assessment period ( VZ ) 2013, 8,130 EUR ( § 52 § 41 sentence 1 of the Income Tax Act ).
  • Lump-sum savings: capital gains are taxed only to the extent (from 2009), they exceed 801 EUR per year ( § 20 para 9 ITA).

Example ( to 2008): Revenue from capital assets ( eg interest) 10,000 €. / .Werbungskostenpauschale 51 €. / .Sparerfreibetrag 750 € = Tax base 9,199 EUR = Income from capital Example ( from 2009): Revenue from capital assets ( eg interest) 10,000 €. / .Sparer 's Allowance 801 € = Tax base 9,199 EUR = Income from capital Allowance on the disposal of businesses ( steep ): § 16 para 4 Income Tax Act, similar to § 17 paragraph 3 ITA. Both allowances are reduced, provided that the proceeds of the sale exceeds a certain level, so that at high gains no allowance is granted. Child tax credit under § 32 Income Tax Act. Single parent tax allowance pursuant to § 24b German Income Tax Act. Age discharge amount according to § 24a German Income Tax Act. Training allowance under § 33a para 2 Income Tax Act. Disabled lump sum pursuant to § 33b German Income Tax Act. Allowance for income from agriculture and forestry in accordance with § 13 Section 3 Income Tax Act. Instructor allowance according to § 3 No. 26 Income Tax Act. Discount allowance according to § 8 paragraph 3 ITA. Exemption for pensions in accordance with § 19 Section 2 Income Tax Act. Securing the future allowance according to § 3 No. 62-64 Income Tax Act

Inheritance Tax

  • Factual allowances: § 13 ErbStG: remain tax-free: household goods up to a value of 41,000 € and other movable tangible property up to a value of 12,000 €, only at persons of category I ( see below), otherwise only for a total of 12,000 €. Certain other affection, eg listed buildings, etc.
  • Personal allowances § 16 ErbStG: Spouses and significant: 500.000 €
  • Children and children of deceased children: 400.000 €
  • Children of Children: 200.000 €
  • Remaining persons, the tax class I (eg: parents and grandparents): 100.000 €
  • Persons, the tax class II (eg: Siblings, parents and children ): 20,000 €
  • People in the Tax Class III: 20,000 €

Allowances for other types of tax

  • Business tax: partnerships and sole proprietors are only used for trade tax if you trade income exceeds € 24,500. The allowance is considered that partnerships and sole traders the imputed wage may not deduct from income how it can do these corporations at the CEO compensation, even if the managing director is a partner at the same time.
  • Corporate tax exemption for certain entities, § 24, § 25 of the Corporation Tax Act

Allowances, allowances and related expenses lump sums

To be distinguished from allowances are allowances and related expenses lump sums that have similar objectives and effects.

  • Allowance vs. Exemption limit: While an allowance continue to be accorded, if the income exceeds the allowance, an allowance will no longer be granted.
  • Allowance vs. Advertising costs lump sum: A tax allowance is granted after deduction of expenses, while advertising costs lump sum will be invisible if you want to make higher income-related expenses. Example: With revenue of € 1,000 and expenses ( advertising costs, WK ) of a case: 50 €, case b: 200 €, an allowance (FB ) and a lump sum professional expenses ( ISI) of € 100 each will be granted.
Taxation in Germany Sole proprietorship Profit (economics) Limited company
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