Extensive system of withholding taxes (WHT)
Germany has an extensive system of withholding taxes (WHT) deducted in
order to secure the tax revenue. The most important of these is the income tax
deducted from employees salaries (the so-called “wage tax”), followed by
withholding taxes of 25% from dividends, interest and capital gains from
investments held for safe-keeping by banks.
There is also a requirement on
institutions to deduct 15% from payments to most builders. The wages and
other withholding taxes are uplifted by a “solidarity surcharge” of 5.5%.