Einkunftsquelle

Einkunftsquelle is a term used in German tax law to describe the origin from which a person derives income, and thus a classification category for calculating income tax. The concept is embedded in the structure of the Einkommensteuergesetz (EStG), which defines several types of income and their respective sources.

According to §2 EStG, the main Einkunftsarten (types of income) are seven: Einkünfte aus Land- und Forstwirtschaft (agriculture and forestry), Einkünfte aus Gewerbebetrieb (business activity), Einkünfte aus selbständiger Arbeit (independent professional work), Einkünfte aus nichtselbständiger Arbeit (employment), Einkünfte aus Kapitalvermögen (capital assets), Einkünfte aus Vermietung und Verpachtung (rental and leasing), and sonstige Einkünfte (other income). Each Einkunftsquelle has its own rules for calculating income: revenues from the source minus allowable expenses or deductions yield the “Einkünfte” from that source.

The sums of the Einkünfte from all sources form the total income for tax purposes. This total is then adjusted by allowances, deductions, and special rules to determine the zu versteuerndes Einkommen (taxable income). The concept of Einkunftsquelle helps define which rules apply for losses, deductions, and offsets, and it influences how income is reported on the income tax return and assessed by the Finanzamt.

In practice, individuals may have multiple Einkunftsquellen (e.g., employment and rental income), each treated according to its corresponding category, before being combined for the final tax calculation.