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There will be tax cuts, not tax hikes for Germany’s new coalition government

Germany’s three political parties set to form the next governing coalition have agreed to decrease the solidarity tax burden, according to the text of the recently released agreement.

This solidarity tax is a 5.5% surtax on both corporate and individual income which is used to fund economic development in the east of Germany. The three parties of the Christian Democrat Union, the Social Democrat Party, and the Free Democrat Party have agreed that the incoming government would reduce the tax for those on low and middle incomes, as a first step towards progressively abolishing it.

The coalition settlement pledges not to increase tax on German taxpayers, but has a strong importance on tackling tax evasion and on co-operating with other jurisdictions to ensure the appropriate alignment of tax and corporate profits, particularly with regards to the digital economy.

“We support just taxation of large corporations, especially the internet companies Google, Apple, Facebook and Amazon,” this document advises.

The arrangement also declares the new coalition’s support for the anticipated European Union common corporate tax base, and for a “substantial” financial transactions tax at EU level.

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