Merz: The Distribution of Income of Self-employed, Entrepreneurs and Professions
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If in the following we refer to the self-employed, we include all persons with the above
three possible profit income sources, where ‘independent’ (self-employed) work by
professions (selbstandige Arbeit) is only one source of self-employed income.
5.3.2 Professions, New Definition in the Recent Income Tax Statistics
The description of the income nature in the light of the German Income Tax Statistics of
professions, in particular, is changing. In contrast to other countries, in Germany
freelance work, work by professions, is (more or less) exactly defined by the legal
framework according to § 18 Abs. Nr. 1 Satz 2 EStG. Here we have a definition of the
so-called ‘catalogue professions’ (Katalogberufe). A key element of what is termed a
profession are self-employed activities concerned with science, art, writing, teaching or
instructing or education.
The tax law in particular describe self-employed professional activities as activities of
medical doctors, dentists, veterinarians, lawyers, notaries, patent attorneys, surveying
engineers, engineers, architects, trade chemists, auditors (public accountants), tax
consultants, consulting economists and business administrators, sworn in auditors,
authorised tax agents (Steuerbevollmachtigte), nonmedical practitioners, physio-
therapists, journalists, translators, pilots and similar professions.
What is problematical at this point is the rather loose legal term 'similar professions'. In
the individual case it is often difficult to assign these profession to a certain income tax
classification. Next to being self-employed and self-responsible it has been decided by
the courts that further elements for classification of professions are an individual
specialised knowledge of the subject at hand, practising at own risk and on own
account. Hereby it is permissible to for the professional to also make use of services
supplied by a third party (like an assistant working under a dentist, for instance).
Alongside these definitions further socioeconomic attempts have been made to classify
professions. As examples one could cite Deneke (1956, 1986), Büschges (1989), Sahner
(1989) or Merz, Rauberger and Ronnau (1994) which have all characterized the
socioeconomic relevance, implications and scope of professions.
For our purposes we naturally will use the definition used in the Income Tax Law as
this provides the basis for the Income Tax Statistics, our database.
The German Income Tax Statistics accrues and supplies data for a selected set of
professions. Though selected, the complete picture nevertheless is covered with the
category 'other professions'.
Those liable to pay income tax are grouped in the following way:
?? Lawyers and notaries including patent attorneys
?? Auditors and sworn in auditors
?? Tax consultants, authorised tax agents (Steuerbevollmachtigte)
?? Other business consultants
?? Medical doctors
?? Dentists excluding dental technicians
?? Veterinary doctors
?? Natural medical practitioners (Heilpraktiker)
?? Paramedical professions
?? Architects including garden- and landscape architects, interior architects, surveying
engineers, civil engineers but excluding film- and stagearchitects
?? Other engineers and technicians