The government wants to attract top foreign talent to Germany. But the fact that they should pay less taxes than domestic employees is raising eyebrows. Is that allowed?
The Bundestag’s research service has serious doubts about the planned tax rebate for foreign skilled workers. A strict interpretation of the legal situation would unduly disadvantage employees who have been working in Germany for a long time. “The disadvantage may be appropriate and necessary to achieve the economic policy goal; however, it is no longer appropriate,” says the report commissioned by the Sahra Wagenknecht Alliance (BSW), which the German Press Agency has received.
At the same time, however, the experts clearly point out that in the past the Federal Constitutional Court has granted the legislature much greater leeway when it comes to tax subsidies. If more generous review criteria are applied, as the Constitutional Court does, “the unequal tax treatment could be justified,” the report states. In this case, it is sufficient to provide an objective reason for the different taxation.
Top talent urgently needed
As part of its “growth initiative”, the traffic light government plans to introduce tax incentives for taking up work in Germany in order to make Germany more attractive for foreign skilled workers. The plan is for newly immigrated skilled workers to be able to exempt 30, 20 and 10 percent of their gross wages from tax in the first three years. This exemption – with a lower and upper limit – is to apply to “top talent” from abroad, who can receive a tax-deductible “recruitment bonus”.
The Federal Government points out that similar models are also being practiced by many other European countries in order to attract urgently needed skilled workers from abroad.
Wagenknecht sees “discrimination against nationals”
However, the Bundestag’s research service is of the opinion that this justification is not sufficient. There are “significant reasons for applying a strict test standard” – among other things because taxpayers cannot influence whether they receive the discount or not and because this means that taxation is no longer based on financial ability.
The report was commissioned by BSW party founder Sahra Wagenknecht. The result was devastating for Chancellor Olaf Scholz (SPD), Vice Chancellor Robert Habeck (Greens) and Finance Minister Christian Lindner (FDP), she explained. “A tax advantage for foreigners would be socially explosive!” The idea proves that the federal government has no feeling for the mood in the country and is doing a poor job. “The traffic light coalition must abolish this tax discrimination against domestic residents,” demanded Wagenknecht.
Source: Stern
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