A recent development in Germany prompts us to provide a short primer on a tax peculiarity in Europe. Recently, Germany's Roman Catholics Bishops issued a decree that, effective September 24th, registered members of its congregations are to be denied the right to Holy Communion or religious burial if they stop paying church tax. Two days later, Germany's top administrative court agreed with Roman Catholic bishops.
Church tax is common in much of Europe. Dating from pre-Christian times when maintenance of churches belonged to local principalities, church tax is imposed on members of some religious congregations in Austria, Denmark, Finland, Germany, Iceland, Italy, Sweden, parts of Switzerland, and several other countries. A major source of church revenue, church tax is used to fund programs and maintain infrastructure. It only applies to registered members of an official church, including Protestant, Catholic and Jewish congregations.
In some locales, on the basis of tax regulations passed by religious communities and according to state laws, tax authorities may collect church tax from the members of community on the basis of income tax assessments, and receive remuneration from the congregations for that exercise (thereby maintaining separation of church and state), or they may choose to collect the church tax themselves. Typically, an employee elects to pay church tax via a separate monthly payroll deduction. This is done at the start of employment as part of payroll setup, when the employee designates a religion.
In Germany, rates for church tax are currently 8 to 9% of the individual’s income tax, depending on the state. This means that if an individual earns €60,000 annually at an average tax rate of 20%, he/she pays €12,000 in income tax. Church tax, at a rate of 8% (or 9%) would be imposed at €960 (or €1080). It's worth noting that Germany levies no state, local or municipal taxes, only income tax on the federal level.
Under German law, members may formally declare their wish to leave a religious community to state (not religious) authorities. With such a declaration, the obligation to pay church taxes ends. In recent years, the number of such declarations has risen, impacting church revenues and prompting the Bishops' action noted above.
For a look at the reaction to this decree, please see this article from the BBC.
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