Is the income tax for retirees becoming a reality in Germany? Every year, millions of Germans face the same issue – filing their tax returns. Germany's tax system poses difficulties for many due to the numerous forms, attachments, and evidence required.
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This fact has been acknowledged by the federal government, leading to the convening of an expert commission to develop a more modern and forward-looking tax legislation. This could bring about significant changes not only for employees but also for retirees.
Will the income tax for retirees emerge? Details
In a press release from the Federal Ministry of Finance, State Secretary Katja Hessel called for aligning tax legislation with future needs. She emphasized that in recent years, too much has been expected from both citizens and tax consultants.
To address these issues, a 13-member commission has been formed, comprising tax experts from various sectors, including:
- Universities;
- Business associations;
- Tax unions;
- The association of tax consultants;
- Taxpayer;
- Service provider associations.
These experts will discuss numerous tax issues and develop solutions by the summer of 2024. The modern tax reform is intended to counteract the shortage of qualified workforce, as this extends beyond tax authorities.
According to the German Tax Union, by 2030, there is likely to be a shortage of over a million qualified workers in the public sector.
This deficit will be particularly noticeable in financial management, as around 45,000 employees are expected to retire.
Members of the commission, including Hessel, are exploring ways to address this crisis.
One idea proposed by Hessel is:
- The simplification of bureaucratic documentation;
- The increase of fixed amounts;
- The utilization of digital solutions.
This would help ease the burden on employees.
Another approach is more focused on retirees. At least six million retirees are required to file tax returns every year, adding an extra burden to tax authorities. This is where the expert commission sees the need for action.
Their idea is as follows: the incurred tax could be withheld directly at the time of payment – essentially a form of payroll tax. This means that many retirees would no longer have to deal with tax returns.
Whether the commission's proposal will be implemented will only become clear in the coming months. Active negotiations on this topic are currently underway.
Related topics:
The expert commission is considering a proposal to simplify tax procedures for retirees, which includes the direct withholding of taxes at the time of payment, potentially eliminating the need for many retirees to file tax returns annually. Due to the retirement of a significant number of employees in financial management, there's a concern about a potential shortage of qualified workers in this area.
The proposed changes in tax legislation could significantly impact retirees, as the income tax for retirees might become a reality in Germany, altering their financial management and tax filing process.
