General
What is the flat-rate church tax?
If the employer decides to apply a flat rate for income tax for employees with unlimited tax liability, church tax must also be calculated at a flat rate. To this end, employers can use the simplified procedure and the verification procedure.
The employer can choose which procedure to apply differently for:
- each income tax filing period
- the applicable flat-rate rule or
- the various cases in which the individual legal provisions allow for a flat-rate calculation.
Please note:
An exception to the flat-rate income tax is made for low-income employees, for whom a flat rate of 2% is applied. In this case, the flat-rate church tax does not apply, as both church tax and solidarity surcharge are covered by the flat-rate tax on wages.
Amount of church tax rates
The church tax rate is shown in the table below. The decisive factor is the federal state in which the employer's permanent establishment for income tax purposes is located.
| Country | standard tax rate | Tax rate for lump-sum taxation |
| Baden-Württemberg | 8% | 4.5% |
| Bavaria | 8% | 7% |
| Berlin | 9% | 5% |
| Brandenburg | 9% | 5% |
| Bremen | 9% | 7% |
| London | 9% | 4% |
| Hesse | 9% | 7% |
| Mecklenburg-Western Pomerania | 9% | 5% |
| Lower Saxony | 9% | 6% |
| North Rhine-Westphalia | 9% | 7% |
| Rhineland-Palatinate | 9% | 7% |
| Saarland | 9% | 7% |
| Saxony | 9% | 5% |
| Saxony-Anhalt | 9% | 5% |
| Schleswig-Holstein | 9% | 6% |
| Thuringia | 9% | 5% |
The procedures
The simplified procedure
If the employer opts for the simplified procedure, church tax is calculated as a flat rate based on the lower percentages applicable in the individual federal states. These should take into account that not all employees for whom remuneration is calculated on a flat-rate basis may be liable for church tax.
The decisive factor is the federal state in which the employer's permanent establishment for income tax purposes is located. For income tax purposes, a permanent establishment is defined as the employer's business or part of the business where the remuneration relevant for income tax deduction is calculated.
The verification procedure
In addition to the simplified procedure, employers can also use the verification procedure to calculate church tax on a flat-rate basis. This is always possible if a certificate can be provided that certain employees do not belong to a religious community subject to church tax.
If the employer provides appropriate evidence that some of the employees are not liable for church tax and applies the certificate procedure, church tax must be calculated at the full church tax rate for the remaining employees.
The division is made according to religious affiliation, for example Roman Catholic and Protestant. The church tax determined in the verification procedure must be entered in the wage tax return under the respective code number, for example line 26, code 61 for Protestant church tax.
Example:
An employer in Baden-Württemberg applies a flat rate of 20% to contributions for group accident insurance. He now has two options for calculating church tax:
- He can apply the simplified procedure to calculate church tax at a reduced rate of 4.5% for all employees subject to flat-rate income tax.
- He has the option of excluding employees who are not liable for church tax from the calculation of the flat-rate church tax. In this case, he would have to calculate church tax at the regular rate of 8%.
Please note:
The employer is obliged to provide a certificate showing that some of the employees are not liable for church tax. As a rule, this certificate is carried out using the ELStAM characteristics. If this is not possible, a declaration signed by the employee is required. This declaration is official and is required by the Federal Ministry of Finance.
Choice of procedure
The choice between the simplified procedure and the verification procedure can be made separately for each individual flat-rate case. The only exception is the flat rate under Section 40a (2) of the Income Tax Act (EStG) for low-income employees, as the flat tax rate of 2% already covers church tax and the solidarity surcharge.
If, for example, the employer decides to exclude employees who are not subject to church tax from the flat-rate allowance for travel between their home and their primary place of work, this does not mean that they must also do so for taxable benefits in the context of a company event.
The employer should check for each individual flat-rate option which procedure is more favorable for them, as excluding employees who are not subject to church tax does not always lead to tax savings.
Example:
For 100 employees, direct insurance contributions of €100.00 per month are taxed at a flat rate. The flat-rate income tax is 20%. The tax office for the business premises is located in Thuringia.
10 Employees are not subject to church tax. The employer has the option of excluding these from the church tax flat rate.
Calculation using the verification method
| 90 employees × $100.00 | €9,000.00 |
| flat-rate income tax 20% of €9,000.00 | 1.800,00 € |
| Flat-rate church tax 9% of €1,800.00 | 162,00 € |
Calculation using the simplified method
| 100 employees × $100.00 | €10,000.00 |
| flat-rate income tax 20% of €10,000.00 | €2,000.00 |
| Flat-rate church tax 5% of €2,000.00 | €100.00 |