German income tax law knows so-called withholding taxes in many places. Unlike usual, taxation here does not take place only when the tax return is submitted, but already when the corresponding salary or income is paid out. The tax is thus withheld by the paying agency directly “at the source” and paid to the tax office.
Withholding taxes are a form of income tax collection. They do not constitute a separate type of tax, even if their names (for example capital gains tax, wage tax) initially suggest this. Tax advance payments, such as those made by entrepreneurs, for example, do not constitute a withholding tax.
1st Overview: These withholding taxes are available in Germany
German income tax law knows different withholding taxes, each of which acts as an advance payment on the actual tax liability (usually income tax or corporate tax). As the name suggests, the withholding tax is withheld “at the source”, i.e. by the paying person or company. Only the net amount will be received by the payee.
The following withholding taxes are known in German law:
This article does not replace tax or legal advice in an individual case. Facts, current law, jurisdiction, documentation and implementation remain decisive.