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Tax evasion ‘OK for Joe Normal’ say Germans

Although Germans express outrage when wealthy or famous people evade taxes, many of them do the same themselves, albeit on a smaller scale, a new survey shows.

Tax evasion 'OK for Joe Normal' say Germans
Photo: DPA

The study shows that nearly 20 percent of Germans have at one point employed someone unofficially, thus avoiding tax – and this although 65 percent told pollsters that such practices harm society.

“The study shows that what people think and what they do are two fundamentally different things,” said Erik Thomsen from the Minijob Centre in Essen which commissioned the study from polling firm Forsa.

He told Die Welt newspaper his organization’s estimates would support such figures, with around a quarter of a million domestic cleaners were registered, but that there were up to four million people doing such work in the country.

Nearly 40 percent of those asked in the survey said they would not condemn anyone who saved money using little tricks in, for example, their tax declaration.

Yet 99 percent of the 1,000 people asked, said that unofficial work and tax evasion was unacceptable for the rich and famous.

“Those who earn a lot of money and are in a privileged position are expected to adhere to higher moral standards than the normal citizen,” said Dominik Enste, professor for economic behaviour and ethics at the Cologne Institute for Economic Research.

Football manager Uli Hoeneß, currently under investigation for alleged tax evasion using a Swiss bank account, would be a good example, Die Welt suggested.

“Tax evasion by the rich via secret Swiss bank accounts is poison for the tax morale in a country,” said Enste.

In contrast, paying a cleaner “cash in hand”, or the handyman who does a small job with a bill, thus avoiding tax, is seen as a trifling matter.

The upper middle classes often take the attitude that they have worked for their money and are justified in not giving “too much” to the state in taxes, said Enste. “We have to get away from the thought that the honest people are the stupid ones,” he added.

The Local/hc

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Beskæftigelsesfradraget: What is Denmark’s employment allowance?

Denmark's government may soon announce changes to its tax reform plans, which will give all wage earners a bigger employment allowance. What is this and how will it affect foreigners' earnings?

Beskæftigelsesfradraget: What is Denmark's employment allowance?

What is the employment allowance? 

The Beskæftigelsesfradraget (from beskæftigelse, meaning employment, and fradrag, meaning rebate) was brought in by the centre-right Liberal Party back in 2004, the idea being that it would incentivise people to get off welfare and into a job.

Everyone whose employer pays Denmark’s 8 percent AM-bidrag, or arbejdsmarkedsbidrag, automatically receives beskæftigelsesfradraget. Unlike with some of Denmark’s tax rebates, there is no need to apply. The Danish Tax Agency simply exempts the first portion of your earnings from income taxes. 

In 2022, beskæftigelsesfradraget was set at 10.65 percent of income with a maximum rebate of 44,800 kroner. 

How did the government agree to change the employment allowance in its coalition deal? 

In Responsibility for Denmark, the coalition agreement between the Social Democrats, the Liberals and the Moderate Party, the new government said it would set aside 5 billion kroner for tax reforms.

Of this, 4 billion kroner was earmarked for increasing the employment allowance, with a further 0.3 billion going towards increasing an additional employment allowance for single parents.

According to the public broadcaster DR, the expectation was that this would increase the standard employment  allowance to 12.75 percent up to a maximum rebate of 53,600 kroner. 

How might this be further increased, according to Børsen? 

According to a report in the Børsen newspaper, the government now plans to set aside a further 1.75 billion kroner for tax reforms, of which nearly half — about 800 million kroner — will go towards a further increase to the employment allowance. 

The Danish Chamber of Commerce earlier this month released an analysis in which it argued that by raising removing all limits on the rebate for single parents and raising the maximum rebate for everone else by 20,300 kroner, the government could increase the labour supply by 4,850 people, more than double the 1,500 envisaged in the government agreement. 

According to the Børsen, the government estimates that its new extended allowance will increase the labour supply by 5,150 people.  

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