The Catholic and Evangelical churches in Germany are set to lose around €1 billion ($1.18 billion) in taxes paid by the faithful in 2020, according to a report published in Welt am Sonntag on Sunday.
According to estimations, both churches can expect to see an average fall of around 8% in theirincomes, double the loss seen during the 2009 financial crisis.
The two religious bodies will likely receive a combined maximum of €11.69 billion in 2020 in comparison to the €12.71 billion received in 2019 — which broke down to €6.76 billion for the Catholic Church and €5.95 billion for the Evangelical Church.
Church taxes in Germany is paid voluntarily by church members. The tax is taken directly from the payer's income by the state tax office and amounts to between 8% and 9% of a workers' income tax commitment.
The pandemic has caused a 'slump'
With millions ofpeople in Germany losing their jobs or moving to part-time working hours as a consequence of the coronavirus pandemic, church tax rates havefallen.
With churches shut, prayer goes digital
The loss in tax income varies across regions with some Catholic dioceses expecting a reduction of 4% while others may see their income drop by up to 13%.
A statement from one diocese spoke of a "significant slump."
"How things will look by the end of the year will depend very much on whether and how the renewed coronavirus-related restrictions and the second lockdown continue to affect the regional economy," the financial director of the Passau diocese, Josef Sonnleitner told the KNA press agency.
Around half of the 44 million Catholics and Protestants in Germany pay the tax. Children and young people without an income do not pay. People on low wages and the unemployed are also exempt.
The amount of tax received by the churches in 2019 was a record high and represented a 2.4% increase over 2018.
A media report has predicted a loss of around €1 billion euros for Germany's two church institutions in 2020. The fall comes from dwindling taxes deducted from workers' incomes due to layoffs and working hour cuts.
Churches* in the United States have been unofficially federally tax-exempt since the country's founding until they received an official federal income tax exemption in 1894. Additionally, all 50 U.S. states and D.C. exempt churches from paying property tax.
The IRS doesn't tax churches because they consider them the same as other charities. This is because churches support their communities in numerous ways. Many provide social services, such as shelters and food pantries. They often provide assistance for low-income families, including free afterschool programs.
In 2022, the Catholic Church in Germany received 6.85 billion euros in net tax revenue. Germany has a mandatory tax that all members of the Catholic Church pay, it varies between 8 and 9 percent of income tax, depending on the federal state.
Churches and religious organizations are generally exempt from income tax and receive other favorable treatment under the tax law; however, certain income of a church or religious organization may be subject to tax, such as income from an unrelated business.
To stop paying church tax, there's a formal leaving process known as Kirchenaustritt. In most states of Germany, this involves a personal visit to the district court, Standesamt (civil registration office) or church office. It's also possible to get a declaration notarized independently, but it costs more.
However, pastors are taxed under the SECA system due to the self-employed side of their dual tax status. You pay the entire tax (15.3% of your salary and any provided housing allowance ), since under the self-employed classification, you are both the employer and the employee.
Regardless of whether you're a minister performing ministerial services as an employee or a self-employed person, all of your earnings, including wages, offerings, and fees you receive for performing marriages, baptisms, funerals, etc., are subject to income tax.
Romans 13:6-7 says, “This is also why you pay taxes, for the authorities are God's servants, who give their full time to governing. Give to everyone what you owe them: If you owe taxes, pay taxes; if revenue, then revenue; if respect, then respect; if honor, then honor.”
Only 18% require over $500k to operate, and around 15% require under $50k annually for their budget. Of course, these numbers largely depend on the size of a church and its demographics. But you can safely assume that most churches in America make over $100k and less than $1 million a year!
A ministry can participate in some political lobbying, as long as it's issue-driven and not related to a particular candidate. However, if lobbying becomes a substantial part of its activities, a church could jeopardize its exempt status.
Members of other religious communities, including the Orthodox, Baptist, Salvation Army, Jehovah's Witness, Muslim and Buddhist communities, are not liable to pay church taxes in Germany.
The authors estimated that at least 3,500 people within the church have committed sexual abuse, with a third of the perpetrators being clergy members. The authors further estimated that over 9,000 children and young adults have suffered sexual abuse within the EKD since 1946.
Church tax ("Kirchensteuer") is a tax additional to income tax and is forwarded by the tax office. The taxation rates vary from 8% to 9% of your income tax, depending on the state. In Hamburg, the taxation rate is 9%.
The solidarity surcharge (Solidaritätszuschlag) is a surcharge on income tax and corporation tax, introduced to meet the costs of German unification. The surcharge is currently 5.5 percent.
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