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Businesses fret over delayed electronic income tax system

The Local · 1 Nov 2011, 15:37

Published: 01 Nov 2011 15:37 GMT+01:00

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Uncertainty over the new system – an electronic version of the paper Lohnsteuerkarte document employers have used since 1925 to track their employees' wages and tax obligations – is unlikely to affect the day-to-day lives of regular working stiffs.

But it could turn record keeping at German businesses into chaos as managers figure out how best to collect tax data during the transition period that has now been extended by several months, the Handelsblatt newspaper reported on Tuesday.

The introduction of the new system, which was supposed to happen this year, has already been pushed back by the Financial Ministry several times due to technical problems.

“Businesses and employers need predictability so they can pay the income tax on January 1,” Isabel Klocke of the Federal Taxpayers Association told Handelsblatt.

Once the new system is introduced, all workers will get a new electronic record known by the clunky German abbreviation ElStAM for Elektronische Lohnsteuerabzugsmerkmale. It is supposed to mean less paperwork for everyone involved. It will also allow them to more easily control what personal information is released to employers. It will, for instance, be possible for workers to block the release of information about their new marriage.

Already, some Germans have been receiving notification of their new ElStAMs, but not without difficulties arising. In some cases married couples were registered in the wrong tax bracket among other problems, Handelsblatt reported.

“Taxpayers should check the information closely,” Reiner Holznagel a vice president at the Federal Taxpayers Association told the newspaper.

Story continues below…

The colourful paper Lohnsteuerkarte has a long history in Germany that stretches back to 1925. But as Germany’s population has grown and business complexity has increased it has become an anachronism that many see as inefficient and out of step with changing times.

The Local/mdm

The Local (news@thelocal.de)

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Your comments about this article

19:34 November 1, 2011 by catjones
Setbacks are due to blurred forms. The law states that if one employee wants a blurred form, all employees must get blurred forms. The fear is that someone can see your form and thus see your taxes.
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