TAXES IN GERMANY

All resident individuals are taxed on their worldwide income. Non-resident individuals are taxed (in the case of investment and labor income, generally by withholding) only on German-source income.

Taxable income covers income from the following categories:

Agriculture and forestry.

Trade or business.

Independent professions.

Employment.

Capital investments.

Rents and royalties.

Other income (subject to tax laws).

Net income

Net income is calculated on the basis of all gross income received during the calendar year reduced by income-related expenses for the same period for each of the above categories. Losses from one of the seven major income categories (other than capital expenditures) may be offset in full against positive income from another income category (exceptions may apply for "other income").

Taxable income

Total income after deductions for each category, which may be further reduced by lump-sum deductions or, within limitations, by actual payment of special expenses as defined by tax law, constitutes taxable income.

Personal income tax rates

The following progressive tax rates apply in Germany (tax year 2023):

* Geometrically progressive rates start at 14% and rise to 42%.

These rates are adjusted regularly.