rechte, zweite Spalte

PAYE-tax / wage tax / monthly pay roll tax

The wage or salary tax ("Lohnsteuer") is just an additional way to cash in advances on the income tax payable by an employee residing in Germany, in monthly instalments, with the kind assistance of his German based employer. In other words: every German based employer is obliged by law to deduct from the taxable wage, including taxable benefits in kind, the wage tax in the amount prescribed by law, and to transfer the wage tax to the financial authority. The exact amounts must be taken from lists specially prepared to this effect, and taking into account the personal situation of the employee (single / married, number of children, etc.). The wage tax does not free the employee from his or her obligation to file an income tax return at the end of year; this is usually even beneficial for the employee as the total of the wage tax payments tends to be somewhat higher than the income tax due, as the wage tax lists do not provide for all tax deductible expenses, in the individual case.