Einkünfte

Einkünfte refers to income in German. It is a broad term encompassing all types of financial gains a person or entity receives during a specific period, typically a year. This can include earnings from employment, self-employment, capital investments, rental properties, pensions, and other sources. In the context of German taxation, Einkünfte are crucial for determining an individual's or company's tax liability. The German Income Tax Act (Einkommensteuergesetz) categorizes various forms of income into seven distinct types. These categories are: income from agriculture and forestry, income from self-employment, income from trade or business, income from employment, income from capital assets, income from renting and leasing, and other income. The aggregation of these different types of Einkünfte forms the basis for calculating taxable income. Deductions and allowances can then be applied to arrive at the final taxable amount. Understanding the definition and classification of Einkünfte is therefore fundamental for navigating the German tax system.