The coalition’s decisions on the “wealth tax” also affect companies.  

The government coalition’s tax reforms are intended to provide ten billion euros in relief for low and middle incomes. To offset this, tax subsidies will be reduced and the “wealth tax” will be expanded and increased: For high-earning taxpayers, a tax rate of 45 percent will continue to apply from a taxable income of 250,000 euros, and a tax rate of 47 percent from a taxable income of 280,000 euros.

By autumn of this year, proposals for simplifying tax returns are expected, such as an automatically pre-filled tax return and a requirement for tax offices to issue tax identification numbers to companies within four weeks. Further reform could occur in inheritance and gift tax law, as a ruling from the Federal Constitutional Court is expected later this year.

The changes to the “wealth tax” have the following consequences: High-earning taxpayers who already pay the solidarity surcharge would face a top tax burden of up to 49.6 percent after the reform. If church tax and excess business tax are added, this figure will rise significantly above 50 percent.

Businesses operating as sole proprietorships or partnerships, such as small self-employed individuals and tradespeople, can generally benefit from the relief measures. Medium-sized and larger family businesses, on the other hand, are affected by the offsetting financing measures.

For further questions regarding the wealth tax, please contact the experts at the Altehoefer tax firm for international tax consulting.