German Self-Employed To Pay Corporate Tax Under Government Plan

by Ulrika Lomas, Tax-News.com, Brussels

07 August 2003

As was suggested in earlier reports, as part of a revamp of the German local taxation system, Chancellor Gerhard Schroeder is considering levying corporate tax on the self-employed in order to create an extra source of revenue for local authorities.

Following a meeting earlier this week between Schroeder and members of the government, a package of measures has been put together which will boost tax revenues for local governments by 5 billion euros. It is thought that half of this would come as revenue from the corporate taxes levied on the self-employed, and the remainder would come in the form of increased federal payments to services such as local child care centres.

However, before the plan can take effect, it must receive parliamentary approval, and is likely to face a tough test in the conservative-dominated upper house, where Christian Democrats are unlikely to look favourably on the measures. Speaking in a television interview on Tuesday, general secretary of the Christian Democrat party, Laurenz Meyer, described the proposal as a "tax increase for small and medium-sized businesses."

Recommended