Merz: The Distribution of Income of Self-employed, Entrepreneurs and Professions
normally stays in Germany he/she is limitedly liable to pay income tax, meaning that
only the income derived within the boundaries of Germany is taxable.
Tax burdened: A person liable to pay tax is burdened if the assessment delivers a
positive income amount and an income tax amount of at least DM 1 has been set
Loss cases: if the assessment yields to a negative income (deficit).
Income types (Einkunftsarten): According to § 2 Abs. 1 EStG the following seven
types of income are taxable:
?? income derived from agriculture and forestry
?? income from business activities
?? income derived from dependent work
?? income derived from independent work
?? income from capital property/assets
?? income from letting and lease
?? other income according to § 22 EStG.
These types of income are taxable for both unrestrictedly and restrictedly taxable
persons. In the latter case this only applies to income attained within the German
borders.
Total income (Einkünfte): These are profits for income from agriculture and forestry,
business practice and self-employment. It is the surplus of income vs. professional
outlay for the other income types.
Professional outlay (Werbungskosten): They serve to secure the income situation.
There are lump-sum amounts if the outlays are not certified.
Special expenditures (Sonderausgaben): Deductable expenditures due to certain
economic, social and cultural reasons.
Unusual burdens (Auβergewohnliche Belastungen): Deductable expenses for
unusual obligations.
5.2.2 Determination of Taxable Income
For each individual tax payer from the sum of all income (Summe der Einkünfte)
subdivided into the seven income types, via total income (Gesamtbetrag der Einkünfte),
the income (Einkommen) and finally the taxable income (zu versteuerndes Einkommen)
according to § 2 Abs. 5 EStG the taxable income finally is calculated (see Table A1a).
All income (Einkünfte) as profits or surplus from the seven income types is calculated
after the deduction of professional outlay (Werbungskosten) respective business
allowances (Betriebsausgaben).
Besides of old-age exemptions and exemprions for working in agriculture and forestry
some amounts still to be taxed have to be added to the sum of all income to get the total
income.
Special expenditures, part of profits not withdrawn, extraordinary tax burdens, self-
utilisation of accommodation and loss deductions reduces total income to income.