Personal Income tax rates in Germany are calculated on the basis of a mathematical formula. For 2002, the following tax schedules are applicable:
Single Taxpayers:
" a zero tax rate on taxable income up to € 7,235
" a marginal tax rate rising form 19.9% to 23% on taxable income between € 7,236 and € 9,251
" a marginal tax rate rising from 23% to 48.5% on taxable income between € 9,252 and € 55,007
" a marginal tax rate of 48.5% on taxable income over € 55.007
Married Taxpayers:
" a zero tax rate on taxable income up to € 14,470
" a marginal tax rate rising from 19.9% to 23% on taxable income between € 14,472 and € 18,502
" a marginal tax rate rising from 23% to 48.5% on taxable income between € 18,504 and 110,014
" a marginal tax rate of 48.5% on taxable income over € 110,014
As of the year 2001, Germany has a new system for the taxation of business income. The corporate tax rate is 25%. In the case of individuals and partnerships, the general income tax rates are lowered in accordance with the above rates. In addition to this tax reduction, the German trade tax is taken into consideration in determining the income tax.
Up to the the end of the year 2000 German corporate income was taxed at 40% if the income was retained and at 30% if the income was distributed. Foreign corporations with income from German operations were subject to a tax of 40% whether or not the income was distributed.