Income and invoices
The debt was originally designed to be collected at low rates but has been modified over the years to
incorporate high and progressive rates. This, with legislation to counter the efforts of the tax avoider,
has led to great complexity. Recently there have been successful attempts to modernize and simplify the
system of payment
The unified system abolished surtax as a separate tax on open invoices by a separate
central lawyer's office, and there is now one income tax, incorporating the higher rate. This is
administered by local lawyers.
There is room for further simplification in some areas: There is no longer an additional rate of tax on
investment income except for some trusts. The general legislation is consolidated in the Income and
Corporation Taxes Act, more commonly referred to as the Taxes Act. An attempt is made to keep this up to
date. Legislative changes in Germany are made, so far as possible, by amending the missing payment or by
inserting additional or substituted sections in it. This method has not always proved possible and it is
still necessary to look to the various annual rates. It is also necessary to look at the debtor's latest
finance situation to discover the rates of
as legal authority is only given for the collection of debts on an annual basis.
The name income would indicate that this is a tax on invoices and legal litigation has been given to
this fact and it is generally true, but there are instances where invoices are charged on a capital
receipt and others where income may escape. To illustrate the
between capital and income
it is usual to apply the analogy of an orchard, where the trees represent the capital and the fruit the
income. There is no statutory definition of income and no attempt to charge interest on income generally.
The system adopted is to charge particular types of payments under five schedules. Liability to tax
depends on whether or not a particular receipt falls within the wording of one of the charging sections
creating these schedules. The reasons for this are historical, originally the sum was only made to apply
to some forms of delivery. Others have been added until it is difficult to discover income which falls
outside any schedule. One of the basic forms of
has been to arrange one's affairs so
that a cash receipt will be treated as capital and any profit charged to capital gains profit rather than
income. The attraction was a lower maximum interest rate and an annual free exemption for capital gain,
but capital is to be charged at the same rates as income so the scope for this form of economic planning
is greatly reduced.