With numerous resolutions – including the one of 31.05.1990 (2 BvL 12, 13/88) – the Federal Constitutional Court (BVerfG) has taken a stand on the prohibition of excessive amounts in tax law. Such over-taxation is then regularly assumed if the tax burden exceeds significantly more than 50 %. By applying the trade tax to the income tax according to § 35 EStG, the legislature counters such an unconstitutional excess.
Especially as an entrepreneur you sometimes already move with the income tax in the top tax rate of up to 45 %. With solidarity surcharge and church tax, for example, a taxable income of EUR 300,000 results in a burden of EUR 134,340. We calculated for the federal state of North Rhine-Westphalia (9% church tax) and the case of the individual assessment. The tax burden is 44.78%, but increases with identical factors and higher income up to 48.47%.
Without the possibility of applying the trade tax, this burden would increase by a further 15% on average throughout Germany. Accordingly, there would be a clear violation of the BVerfG standardized overmass prohibition in tax law.
According to § 35 (1) sentence 1 EStG, a crediting of business tax to income tax is possible if and to the extent
This article does not replace tax or legal advice in an individual case. Facts, current law, jurisdiction, documentation and implementation remain decisive.