What is a tax exemption letter

Attention progression reservation!

The large tax exemption letters that were certainly well-intentioned at Corona of late also reveal quite a few horsefoots for you. The incomprehensible distinction in sales tax

The large tax exemption letters that were certainly well-intentioned at Corona of late also reveal quite a few horsefoots for you. You already know the incomprehensible difference in sales tax for beer or currywurst at the table. Now it is also clear: the so-called progression proviso can catch you very cold next year. It is in ยง 32 b EStG, but please do not read this standard. It belongs to the cryptic, anti-citizen, where you don't even know what the author actually wanted.

So as simple as possible: Assume that this year you will receive EUR 20,000 in normal taxable income. In addition, 30,000 euros (e.g. short-time work allowance), which is completely tax-exempt. So 50,000 euros, let's further assume that the tax rate for the 20,000 euros is 10 percent, that for 50,000 euros would be 35 percent. Then the 30,000 euros will remain tax-free and thankfully. But progression proviso means that the 35 percent below will now be applied to the 20,000 euros! Instead of the 2,000 euros tax that can be expected with common sense, suddenly 7,000 euros! And with the social security contributions something is being eaten away.

Unfortunately, it was forgotten to point this out in the tax donation letters. And why this progression proviso was not simply waived is not clear either, it no longer matters. You still have to expect it in the next year. Not that after taking a deep breath, unforeseen liquidity bottlenecks suddenly arise.

Mathias Frenzel

is a tax law expert

and specialist journalist