Germany: tax increase for top earners

Horst Seehofer, the leader of Germany's Christian Social Union (CSU) has recently called for the tax burden to be increased on the country’s top earners.

Georg Fahrenschon, the party’s Finance Minister (CSU) will present tax proposals this autumn to solve the issue and determine exactly what the top rate of tax should be and at which level of income it should be set. However, Horst Seehofer pointed out the need for a whole concept, stating that otherwise the measure would mean "tax rises for all", with low- and middle-income earners also affected.

Seehofer also warned against excessively high taxes for small- and medium-sized companies, subject to income tax rather than corporate tax, maintaining that by merely increasing the top rate of income tax, two thirds of middle-sized companies would be adversely affected by the increase. These companies have protected jobs during the crisis, he noted, and would be penalized by such a move.

Sigmar Gabriel, the leader of the Social Democrat’s (SPD), would also like the German top rate of income tax to be increased from 42% to 50% while knowing the need for a corresponding rise in the threshold at which the rate is set, from EUR 52,000 to EUR 70,000

By this autumn, proposals for a reform of the German tax system will be presented by the Free Democratic Party.

For more information on German tax, or to discuss the impact of these changes on your income, please contact Matt, Paul or Jason on +41 32 732 97 00.