Germany: New wage tax bulletin from Ministry of Finance for tax deductions in 2010

January 3, 2010

The bulletin of the Ministry of Finance concerns wage tax class
combination and new “Faktorverfahren” for wage tax deductions for the
year 2010

In Germany, for income tax purposes, there are six wage “classes”.
Every employee will have a tax card and will be subject to a wage tax
class. The applicable class will vary according to a variety of factors,
including whether, for example, an employee is single, married or has a
number of employments.

German income tax law allows spouses, who are not permanently
separated and who are subject to German income tax without any
limitations, to combine wage tax classes III, IV or V, in the
combinations III/V or IV/IV.

The bulletin provides information on which combination is most
beneficial for the spouses in certain situations, depending on the
spouses’ income.  From 2010, a new “Faktorverfahren” will give a precise
wage tax withholding ratio, depending on the individual income of each
spouse, by calculating best wage tax class combination for those
individuals.  A formal application to the tax office must be made to
obtain this precise ratio, which must also set out the approximate gross
salary of both spouses in the year.


German Federal Ministry of Finance: Bulletin dated 21.10.2009

For further information or to discuss any of the issues raised,
please contact Joachim Menz (
on +49 89 24 22 30 0.

This article was produced by, and re-produced with kind permission
of, our correspondent firm in Germany, Keller Menz Rechtsanwälte.

Keller Menz


CELIA Alliance
CELIA Alliance members are identified here. Members of the CELIA Alliance are each independent law firms and do not practice law jointly with any other member of the CELIA Alliance. “CELIA Alliance” and “CELIA” are not trading names. For more information about the CELIA Alliance click here.

Content is for general information purposes only. The information provided is not intended to be comprehensive and it does not constitute or contain legal or other advice. If you require assistance in relation to any issue please seek specific advice relevant to your particular circumstances. In particular, no responsibility shall be accepted by the authors or by Abbiss Cadres LLP for any losses occasioned by reliance on any content appearing on or accessible from this newsletter. For further legal information click here.

If you would like to copy or otherwise reproduce this article then you may do so provided that: (1) any such copy or reproduction is for your own personal use or if it is made available to any third party it is done so on a free of charge basis; and (2) the article is reproduced in full together with the contact details, disclaimer and any logos as they appear on each article.

Leave a Reply

Your email address will not be published. Required fields are marked *