The Solidarity Surcharge is a supplementary levy to the Income tax and Corporation tax. In the Lohnsteuer withholding tax procedure, it can be levied in addition to Income tax be withheld from the wages.
What is the Solidarity surcharge?
The Solidarity surcharge is not a separate tax on wages, but rather links to the Income tax or Corporation tax.
For employees, it is taken into account as part of the Wage tax deduction, provided the statutory requirements are met. The employer withholds the corresponding amount along with the Wage tax and remits it to the tax office.
How is the Solidarity surcharge calculated?
The statutory surcharge rate is generally 5.5 percent of the relevant assessment basis. When deducting tax from wages, the calculation is fundamentally based on the Wage tax determined by the Solidaritätszuschlag act.
However, exemption limits and a statutory mitigation rule apply to the Solidarity surcharge. Therefore, the surcharge does not apply to every employee and, if the exemption limit is exceeded, does not immediately amount to the full 5.5 per cent of the assessment base in every case.
What role do child tax allowances play?
When calculating the Solidaritätszuschlag under the Wage tax deduction procedure, children's allowances can affect the relevant Wage tax.
The assessment basis for the Solidarity surcharge may therefore differ from the regularly reported Wage tax.
Solidarity surcharge and Wage tax – what is the difference?
The Wage tax is the form of Income tax levied on employment income. The Solidarity surcharge, on the other hand, is a supplementary levy whose calculation is linked to the relevant tax.
In short: The Wage tax is the underlying tax – the Solidarity surcharge is an additional supplementary levy, provided the legal requirements are met.
Solidarity surcharge and Church tax – what is the difference?
The Solidarity surcharge is a federal supplementary levy. The Church tax on the other hand, is only levied if there is an existing Kirchensteuer obligation and is based on the respective applicable church tax regulations.
Significance for Net pay
If Solidarity surcharge is withheld, it is counted among the tax deductions in Payroll and thus influences the net pay.
