An English Course in Practical Taxation. Учебно-практическое пособие

Block 15. Paying Taxes in Germany

income tax himself. Therefore the wage tax is comparable to the income tax withholding shown on the U.S.

Based primarily on your final payment for the previous year, the tax office will estimate your tax for the current year and require you to make prepayments of a quarter of the tax on March 10, June 10, September 10 and December 10. The total tax liability is determined by filing an income tax return, which includes all types of income from all sources. Wage tax withholding as well as provisional payments are deducted from this total tax liability so that a refund or final tax payment is assessed. The tax assessment is usually issued by the tax office between two and six months from the date the return is filed. No payment will be due before receipts of the tax assessment notice.

Every tax return is under audit, therefore, if the tax assessment is issued and is not preliminary, the assessment can only be changed in the future by the occurrence of extraordinary circumstances (e. g. tax evasion).

As a rule, the income tax return should be filed by May 31 of the year following the one in which the income was received. If you use the assistance of a tax consultant, you have an automatic extension to file until September 30. There may be penalties and interest assessed if the return is filed late.

Single persons who earned €7,235 or less in 2002, and married persons who earned €14,470 or less, usually had no tax liability. There are a few situations where the taxpayer is required to pay taxes even though the income is less than the personal allowance, especially when tax-exempt income (such as foreign-sourced income) must be considered for the determination of the applicable income tax rate (progression clause). Taxes are then assessed based on a sliding scale.

Deductions are granted for circumstances such as children under 18 (or under 27 if still attending school and without earnings), specified insurance premiums, charitable and political contributions to German entities up to certain limits and unavoidable extraordinary expenses above a certain limit (such as illness).

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Other Taxes

In addition to the various forms of income tax there is also a series of sales taxes that significantly impact both individuals and businesses. The major tax is the value added tax, which accounts for a quarter of the government's revenue and is second only to the wage tax in this regard. The value added tax assesses a levy on each step in the production and delivery of most items available for purchase. It applies to services as well as goods and the standard rate is 16%. A reduced rate of 7% applies to certain products, including food and printed material. Medical and insurance services are generally exempt, as are exports of goods abroad and services rendered abroad.

Numerous other items, including gasoline, alcoholic beverages, tobacco products, tea and coffee, carry sales taxes in addition to the value added tax. There is also a church tax, of 8% to 9% of the income tax/wage tax. But you are not required to pay the tax unless you wish to be officially affiliated with one of Germany's established churches; usually Catholic or Protestant.

All in all there are approximately 30 different types of taxes, including taxes on inheritances, real estate and motor vehicles. There is even a tax on the gross amounts received by the state-run lotteries, though the distributions to the lucky lottery winners are tax-free.

Due to the complexity of both the U.S. and German tax systems and their interaction with one another, it is always recommended that you hire a tax consultant to guide you through the intricacies involved in filing returns as well as provide some ease of mind during your stay abroad. In addition, the German tax office will give you tax advice at no charge.

Ex. 1. Find the equivalents for the following words and expressions in the text.

Практический результат; единый дополнительный сбор; освобождение от налога с прибыли на капитал; освободить значительные объемы капитала; недоплата и переплата; спо- соб сбора; сделать предоплату; возникновение особых обстоя- тельств; скользящая шкала; официально присоединиться к государственной церкви; издаваемая государством лотерея; сложность, связанная с подачей налоговой декларации.

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Ex. 2. Complete the sentences, using the appropriate words.

a — adjustments b — liability

c — audit

d — penalties e — resident

f — assessment g — decreasing h — sliding scale i — exemption

j — value added k — wind up

l — collection

1.Germany is now undergoing an extensive tax reform, one that should … putting more money in the pockets of individual taxpayers.

2.The maximum rate for individuals has been gradually ….

3.The most stimulating news for corporations is the … from capital gains taxes when selling holdings in industrial companies.

4.In Germany you can be subject to tax if you either have German source income or if you are a German ….

5.… would be made at the end of the year for possible under or overpayments.

6.The wage tax differs from the income tax only by the method of ….

7.The total tax … is determined by filing an income tax return, which includes all types of income from all sources.

8.No payment will be due before receipts of the tax … notice.

9.Every tax return is under ….

10.There may be … and interest assessed if the return is filed late.

11.Taxes are then assessed based on a ….

12.The … tax assesses a levy on each step in the production and delivery of most items available for purchase.

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Ex. 3. Are the statements true (+) or false (–)? Correct the false statements.

1.Germany is now undergoing an intensive tax reform.

2.The tax reform should wind up putting more money in the pockets of individual taxpayers and having a positive effect on investment.

3.The maximum rate for individuals has been gradually increasing.

4.The corporate tax rate, which was thought to discourage investment in Germany, will decrease from 25%.to only 30—40%

5.In Germany you can be subject to tax if you either haven’t German source income or if you aren’t a German resident.

6.There are many various exemption rules that must be considered in every single case.

7.The German tax system isn’t similar to the structures in other western countries.

8.Deductions from compensation are also made for two social programs: retirement and health insurance.

9.All in all there are approximately 50 different types of taxes, including taxes on inheritances, real estate and motor vehicles.

10.The value added tax assesses a levy on each step in the production and delivery of most items available for purchase.

Ex. 4. Answer the questions.

a.Why is Germany now undergoing an extensive tax reform?

b.What is the most stimulating news for corporations?

c.Under what conditions can you be subject to tax in Germa-

ny?

d.Is the German tax system similar to the structures in other western countries?

e.When are adjustments usually made?

f.For what social programs deductions from compensation are made?

g.Which tax accounts for a third of the German government's revenue?

h.In what way does the wage tax differ from the income tax?

i.How is the wage tax collected?

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j.How is the total tax liability determined?

k.What sales taxes exist in Germany?

l.Why is it always recommended that you hire a tax consul-

tant?

Ex. 5. Translate the following sentences into English.

1.В настоящее время в Германии осуществляется всесторон- няя налоговая реформа.

2.Ожидается, что реформа, относящаяся к акциям, которые были в собственности более года, высвободит значитель- ный капитал для вложения в молодые перспективные компании.

3.В Германии вы выплачиваете налоги в случае, если вы ли- бо имеете источник дохода в данной стране или постоянно там проживаете.

4.Немецкая система налогообложения схожа с подобными системами в других западных странах.

5.Если человек выплачивает налоги в Германии, обычно большинство источников дохода облагается налогом.

6.Налог на заработную плату отличается от подоходного налога только способом сбора.

7.Обычно декларация о подоходном налоге должна быть подана до 31 Мая.

8.Налог на добавленную стоимость является одним из глав- ных налогов, он приносит четвертую часть государствен- ного дохода и стоит на втором месте после налога на зара- ботную плату.

9.Существует также церковный налог, но он является необя- зательным и выплачивается только в том случае, если че- ловек хочет официально присоединиться к одной из госу- дарственных религий, обычно католической или протес- тантской.

10.Всего в Германии насчитывается около 30 различных ти- пов налогов, включая налоги на наследство, недвижимость и транспортные средства.

11.Из-за сложности налоговой системы Германии рекоменду- ется воспользоваться услугами консультанта по налогам.

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Block 16. Tax administration of the republic of Slovenia

tion. The tasks have been carefully planned in annual and other operational plans, their execution has been monitored.

The extent of collected taxes has improved in reality in comparison with the tax debt. The share of tax debt in all collected tax revenues has not been increased. The economy of tax collection, stated as a share of funds used for the activities of the tax administration in comparison with the extent of collected taxes, ranged from 0.9% to 1% in this period, which means a satisfactory result in comparison with other tax administrations.

Significant progress has been achieved in the field of uniformity of procedures. The preparation of methodology and improvement of working procedures are our permanent tasks. A great deal of work has been done in the field of training for practical work.

Considerable progress has been made in the field of subsequent supervision, although the systematic approach to the improvement of concurrent supervision procedures was introduced only last year, when the Control Department was established with this purpose at the Head Office. We have worked intensively in the field of tax evasion. A small group of experts have been involved in this area and they have started with activities for development of systematic work in this field.

A higher level of voluntary tax compliance has been achieved with the progress in informing taxable persons, with the execution of concurrent and subsequent supervision and tax enforcement. We were less successful in putting the efficient sanction policy into force. Our proposals have not been adopted. Procedures, which enable simplified paying of taxes, have been developed mainly for VAT and personal income tax.

Paying taxes as a civic value has not been sufficiently emphasized in comparison with paying taxes as a legal obligation. Paying taxes would be easier to promote if the use of budget funds were clearer and known to the public.

On the basis of the system for communication with different groups of the public, bases for communication with these groups have been made (internal public, taxpayers, external experts, interna-

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tional public, etc.). The system of informing taxpayers has been sufficiently established, especially during the VAT implementation.

The co-operation with almost all groups of external experts has been agreed, including both universities. Bases for including tax education into schools have not been prepared yet.

We have prepared the system of informing the public about the results and the achieved progress. The activities of the tax administration are public.

We treat every taxpayer with respect. Taxpayer’s personal and tax data are carefully protected. We succeeded in this despite external attempts made by some individuals and groups, which tried to misrepresent efforts of the tax administration due to various interests.

We published the rights and obligations of taxpayers, which are available at all offices of the tax administration and the media. We enabled taxpayers to appeal, in connection with irregularities, directly to the Head Office of the Slovene Tax Administration. Appeals were taken seriously. They were checked and measures were taken.

We prepared The Code of Ethics of the Tax Administration staff. Perhaps we didn’t quote it enough in practice, but the code is available to all employees everywhere.

From time to time there were disagreeing points of view on explanations of individual provisions of statutory and implementing acts due to the double-track communication of the Ministry of Finance and the Tax Administration with taxpayers, which had negative influence on the reputation in the eyes of the public. The public confidence in the Tax Administration was not measured in this period.

In this period the IT Division started to operate actively, although it wasn’t able to take over the execution of all key tasks in the field of development and management of tax information system from external providers of services.

We didn’t achieve all the planned objectives. We provided modern IT infrastructure and good equipment for all users, which means a good base for further development in this field. We estab-

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lished a database, which is already a source of qualitative data. We developed access to some external information sources, which have been improved by uniform standards. In the period 1998 — 2000 we didn’t succeed in establishing uniform tax accountancy in our own realization.

Regulations within the public administration and limitations on employing new staff obstruct the management of flexible human resource policy; fast changes in the structure of employees are not possible.

A lot of work was done in the field of training. Activities were directed into special exams for tax inspectors and tax collectors and training at VAT implementation. Our own instructors, who were properly trained beforehand for this purpose, performed most of training programmes.

We introduced a system of measuring results of work in the field of auditing, enforcement, and dispute resolution.

We execute a system of remuneration and promotion of employees in the public administration. We are among the first who take into account the fulfilled formal conditions for promotion as a necessary condition, the average work successfulness is a sufficient condition. Stimulating remuneration is also formal due to the above-mentioned limitations.

Although we planned to provide employees with adequate working space with sufficient, modern equipment and working guidelines and to strive for proportionate working burden, we haven’t succeeded in achieving this so far because a half of regional tax offices is still operating without adequate working space.

In this period there were no changes in the field of security and insurance of all employees of the tax administration.

We succeeded in maintaining and strengthening the independent operations in the field of collecting taxes and the conduct towards taxpayers. This is an achievement, which is very important for healthy development of the tax administration.

In the field of preparing tax legislation we were neglected too much, there is too many involvement of external factors into processes of enforcing changes at the tax administration. This is

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the reason why we weren’t successful in enforcing our proposals of improvements and simplifications of tax legislation, most of our proposals were not taken into consideration.

We estimate that in this period we made great progress in basic tax tasks: assessment, settlement, collection and enforcement of taxes, tax supervision and dispute resolution.

We trained our management for project management and executed the reorganization of the Head Office with the objective to build a management system, which will meet the needs of the public administration.

Our co-operation with various domestic and foreign expert institutes is sufficient.

Regular working meetings according to individual working fields keep the awareness of employees that they are an important part of the tax administration. Employees are also more connected among themselves in this way.

We co-operated in the promotion of tax expertise with active participation in conferences. This co-operation should strengthen in the future, but there are limitations due to insufficient human resources at the tax administration.

Ex. 1. Find the equivalents for the following words and expressions in the text.

Единое управление налогами; согласованность проце- дур; последующий и параллельный контроль; тщательно за- щищено; в связи с нарушениями; двусторонняя связь; отрица- тельное влияние; внешние источники информации; гибкая кадровая политика; система вознаграждения и продвижения по службе; упрощение налогового законодательства.

Ex. 2. Complete the sentences using the appropriate words.

a — remuneration b — subsequent

c — compliance d — public

e — sufficient

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