Regularly payable church tax | Tax burden when capping the church tax

Taxable income | EUR 100,000 | EUR 100,000

Tax liability | EUR 33,000 | EIR 33,000

Regular taxation | EUR 2.970

capping | EUR 3,500

The church tax serves to finance tax-raising religious communities in Germany – primarily the Catholic and Protestant churches. Their calculation is basically based on the established income tax. In certain cases, however, taxpayers can also apply for a capping of the church tax, whereby the church calculates the tax based on the taxable income.

What (who) is actually behind the church tax?

Numerous religious communities in Germany are structured as public law bodies. This property brings about a partial equality of the church with other state institutions, for example a university or a district office.

According to Article 140 of the Basic Law (GG), these religious communities have the right to collect their own taxes to finance their tasks:

The religious societies, which are public law corporations, are entitled to levy taxes on the basis of the civil tax lists in accordance with the provisions of state law.

This is justified by the diverse and in many places also charitable tasks of the Church, for example the support of homeless people in large cities. Although the church tax is often criticized, it still exists in all federal states today.

The countries decide for themselves how high the church tax is. It now stands at 8% or 9% of the established income tax. If a taxpayer has to pay EUR 20,000 in income tax and the church tax rate is 9%, EUR 1,800 in church tax is incurred.

2nd capping of the church tax: Only on request!

By linking income and church tax, the levy payable to the church increases with income. In order to prevent an overload here, there is the possibility in all federal states except Bavaria to apply for a capping of the church tax. Depending on the federal state, the capping is also automatic, so that no application is required.

Due to the capping of the church tax, the levy is no longer calculated on the basis of the income tax, but on the basis of the taxable income. Here, in the individual federal states, a capping rate between 2.75 % and 4 % applies.

The following example shows how the capping of the church tax can have a financial impact. We calculate here with the data for NRW (9% church tax); Cap rate 3,5 %:

There is no financial advantage here by capping the church tax. However, if the income were EUR 150,000 and a cap rate of 3% (example: Berlin), the result would be a tax saving of EUR 272 per year.

3. The capping profit according to § 10 (1) no. 4 EStG

According to § 10 (1) no. 4 EStG, the paid church tax is deductible as a special expense. There are no upper limits, so that it can have an impact of up to 45% in the personal income tax burden.

The capping of the church tax, however, creates a so-called capping profit. Because less church tax is due, taxpayers can also deduct less as a special expense. This leads to a higher taxable income and thus, as a result, a higher income tax burden. Savings through the capping of the church tax thus partially “eat up” the income tax.

If the employer keeps the church tax and comes later to a capping, the special expense deduction also decreases. If this leads to a “plus”, i.e. the taxpayer receives more special expenses reimbursed than he has paid, this difference is taxable. It flows into the taxable income (§ 10 paragraph 4b sentence 3 EStG).