Solidaritätszuschlag

The Solidaritätszuschlag, often shortened to Soli, is a surcharge on income tax and corporate tax in Germany. It was introduced in 1991 to help finance the costs associated with German reunification. Initially, it was intended to be a temporary measure.

The Solidaritätszuschlag is calculated as a percentage of the calculated income tax or corporate tax liability. The rate has varied over time, but currently stands at 5.5% for income tax payers above a certain income threshold. There is a high exemption limit, meaning that many lower and middle-income earners do not have to pay the Soli. For corporate tax, the surcharge is also 5.5%.

The purpose of the Soli has been a subject of ongoing political debate. While proponents argue that it is still necessary to fund infrastructure projects and other costs related to reunification, opponents contend that the original justification is no longer valid and that the tax is an unfair burden. In recent years, there have been significant reforms to the Solidaritätszuschlag, leading to its abolition for a large portion of taxpayers. However, it remains in place for higher earners and corporations. The future of the Solidaritätszuschlag continues to be a topic of discussion in German fiscal policy.