The history of the church tax in Germany is complex and accompanied by many conflicts. Until today, therefore, it is debated whether one should reform the previous practice. Although the Basic Law stipulates a separation between church and state (Article 140 GG in conjunction with Article 137(1) WRV), it also states that it is one of the state’s tasks to collect church tax. The state even intervenes in such a way that the church tax does not lead to a real tax burden for the taxable persons concerned. This succeeds by deducting church tax as a special expense. In this way, the state indirectly promotes the correspondingly taxable faith and worldview communities. In addition, there are also other state benefits, partly due to very far-reaching reasons into the past.

1st History of Church Tax in Germany – Introduction

Are you paying church tax? If so, then you can thank Napoleon Bonaparte for that. But perhaps it was also more the French Revolution. In any case, today we would be discussing completely different taxes (and probably living in a completely different society) if it had remained quiet around the Paris Bastille on July 14, 1789. Because the storm on this prison marks a real turning point. And this led throughout history to the church tax as we know it today in Germany.

So let’s look back at the consequences of these events. They reverberate to this day and will in all likelihood eventually lead to a reform of the church tax in Germany.

History of the Church Tax: Effects of Secularization

The French monarchy fell right after the Bastille. And the republic founded after the coronation of Emperor Napoleon. All this sent shock waves to all over Europe. The effects that entered Germany in 1803 were, among other things, a reorganization of church assets. For it now fell to the individual countries and their princes. As compensation, the churches received the promise that the princes would henceforth pay for their upkeep. But that this was a compromise that the princes wanted to shake off again should hardly be surprising. Therefore, they came up with the idea of having the members of the parishes bear the costs of maintenance. The payment of such benefits at the level of individual parishes was thus the forerunner of our current church tax.

But the history of the 19th The century had many other upheavals in store, which should also affect the development of the church tax. In particular, the industrial revolution (yet another) caused the cities with their industrial locations to grow rapidly at the expense of the rural population. This also led to clear differences between church communities. Rural communities soon had too few church members to cover the costs alone. Of course, the problem was initially tried to be compensated by increasing the level of taxes, but this soon reached its limits in a poor rural population. In the cities, on the other hand, the levies increased enormously even with small individual contribution amounts. But there should be no compensation. Instead, the amount of the levies was set at the level of the general tax. This has remained the case to this day.

History of the Church Tax: Weimar Republic and Third Reich

Another Revolution: The First World War was lost, the Emperor abdicated and Germany sank into the chaos of late autumn 1918. This gave rise to the Weimar Republic as a democratic state. Unlike the nobles from the imperial period, who were always sympathetic to the clergy, the churches now had to cooperate with secular, even socialist-inspired representatives of the people and government. After all, this had the advantage that a uniform regulation was now possible for the whole of Germany. This was also reflected in the Weimar Reich Constitution (WRV) of 1919. Now churches were empowered to collect taxes and use state tax registers. But it ultimately came down to the state taking responsibility for collecting the church tax.

By the way, Bavaria had always had a special role in relation to church taxes, so that many general agreements with the churches required separate Bajuwar treaties and laws. This was already evident in the 19th century. In fact, this special relationship between the Free State and the Church runs like a red thread through the entire history of the church tax.

With the end of the Weimar Republic, the National Socialists introduced a new regime that was less church-friendly. Churches were initially tolerated to some extent. In fact, the church tax was paid from 1935 for the first time together with the wage tax as withholding tax. But gradually the support of the regime fell away. In the midst of the Second World War, the churches finally lost all state support in collecting the church tax. So it came for the second time in the history of the church tax to a collection in self-direction.

4th History of the Church Tax in the GDR

Although the GDR was committed to socialist ideology from the beginning, it again allowed the churches to collect church taxes. To this end, they returned to the regulations as they already existed in the Weimar Republic. This meant that religious communities were allowed to access tax directories to tax their members. But it remained only a few years in this accommodation. Already in the mid-1950s, the regime intensified its action against the churches. It prohibited churches from gaining access to tax directories of tax offices. As a result, the churches were ultimately practically dependent on voluntary payments. As a state-regulated tax, the church tax had thus ceased to exist de facto.

5th History of the Church Tax in Germany

5.1. Church tax in a new guise

In many aspects, the reconstruction of state structures in the western part of Germany divided after the Second World War was a new start. In the course of this reorganization, it had already been determined in the formulation of the Basic Law in which relationship church and state should stand. As a secular Federal Republic, churches should have no connection to the state. Nevertheless, the Basic Law already stipulated the collection of church tax by the state and for the churches – and has been maintained to this day. In this respect, therefore, they were anything but principled.

5.2. Church tax in criticism

In fact, this aspect remained sacrosanct only for a while. In 1973, after years of a conservative-led republic that had an interest in preserving Christian social structures, the FDP, as a party that actually thought liberally at the time, dared to question the compatibility of state and church tax. Although this never led to a serious threat to the church tax in the end, this was the starting signal for a discussion that lasted intermittently until our time.

Nowadays even the churches openly respond to this dispute, but at the same time point out that in the case of the abolition of the cherry tax, a compensation of the former ecclesiastical possessions expropriated by secularization would also have to be negotiated. Now churches throughout history have also been able to accumulate new assets thanks to church tax. However, these far-off claims are still legitimate from their point of view.

Most churches already receive state benefits, partly due to the expropriations of 1803 (especially the Catholic one). In relation to the Evangelical Church, this claim goes back even further. They are to compensate for the returns that the churches would earn from their fortunes today. Incidentally, these benefits are supported by the general public, i.e. without being linked to the church tax. In addition, the Weimar Constitution already contained a mandate to create regulations in order to agree a detachment with the churches. This task was later taken over by the Basic Law. Only one agreement is still pending.

Further criticism arose in the 1960s because at that time many couples preferred a division into occupation and household between husband and wife. In the case of different marriages, the busy spouse, usually the husband, also carried the church tax of the other partner. This unequal treatment was abolished again in the course of the history of the church tax.

5.3. church tax in practice

How was the church tax tailored in Germany? First of all, taxation is a matter for the individual federal states. Therefore, they decide in agreement with the churches there on the level of tax rates. This leads to an unequal distribution, with the tax rate in the Free State of Bavaria and Baden-Württemberg being the lowest at 8%. In comparison, all other federal states have a church tax of 9%.

This applies to both income tax and capital gains tax. Corporate tax and business tax, on the other hand, are exempt from the church tax, which is interpreted as an annex tax. Annex tax means that another tax (in this case income tax or capital gains tax) serves as the basis for calculating the tax.

Remarkable in this context, however, is that taxpayers can deduct the church tax paid by them as special expenses when assessed for income tax (§ 10 (1) no. 4 EStG). This means that the state practically takes over the church tax. This, too, has fueled criticism of the church tax, especially regarding the principle of the separation of church and state. This issue is still relevant.

What is also hardly known is that the church tax meets a capping at high incomes. From a certain capping threshold, instead of the regular church tax calculated on the basis of the income tax, tax is now incurred on the basis of the taxable income. Therefore, church tax as a whole is not a pure annex tax. Depending on the level of the capping threshold, tax rates of 2,75 %, 3 %, 3,5 % or 4 % apply. This creates an advantage compared to the regularly calculated church tax, which is called capping profit. But this “profit” can only be partially rejoiced because it eats up part of the special expense deduction of the church tax again.

5.4 Church money instead of church tax

Another special feature is the church money. This is a supplement to the church tax. Church money is collected by municipalities in cases where taxpayers do not have to pay income taxes for various reasons. There are often exceptions, for example for students or soldiers. In addition, church money can be subject to earmarking, which is publicly communicated by the church communities. Nevertheless, Kirchgeld is rather an exception in Germany. Only a few parishes, especially in the Free State of Bavaria, resort to this option. This is probably also due to the fact that church money is only payable in a small amount, between EUR 5 and EUR 120 per year. Nevertheless, communities trust that their members voluntarily decide to pay the church money. At least you can also deduct church money in full as special expenses.

6th History of the Church Tax in Germany – Conclusion

Similar to trade tax, church tax is a special feature of German tax law. For example, outside Germany it exists in a similar form only in Belgium, Denmark, Finland, France (but only in the two former German territories of Alsace and the Moselle department), Iceland, Italy, Austria, Sweden, Switzerland and Spain. Others have now abolished a cherry tax, such as Norway. What is striking here is that these are exclusively European states. Both the amount of taxation and many other details deviate from the church tax in Germany in part seriously. For this reason, it is quite legitimate to regard the German church tax as a unique selling point of German tax law. And this is undoubtedly a consequence of the special history of the church tax in this country.

But maybe one day miracles will happen and Germany will actually abolish the church tax. It is quite possible that Bayern will then go it alone again. However, this would also mean that the state would have to make significant financial commitments to the churches. However, since the state coffers will remain empty for the foreseeable future, hopes in this direction are currently illusory. In any case, the state is still in the same situation as the princes who struggled with the consequences of secularization in the 19th century. And despite efforts to the contrary in the recent past, he has so far, unsurprisingly, opted for the same option: church tax pay the faithful.