Capital gains mean church losses in new German tax twist

Fri Aug 29, 2014 10:50am EDT
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By Tom Heneghan

(Reuters) - A change in Germany's capital gains tax has prompted an exodus from its Catholic and Protestant churches this year as thousands of registered members quit their parishes rather than pay the money.

Dioceses in both churches have reported in recent weeks that the number of members deserting them has jumped compared to last year, often by 50 percent or more, as banks prepare to withdraw church tax at source for capital gains from January 1.

German tax authorities collect an 8 or 9 percent premium on churchgoers' annual tax bills and channel it to the faiths to pay clergy salaries, charity services and other expenses. Members must officially leave the church to avoid paying this.

Under a simplified procedure starting next year, banks will withhold that premium from church members earning more than 801 euros ($1,055) in capital gains annually and pass it on to tax authorities for distribution to the churches.

Letters from banks announcing the new procedure this summer and asking clients for their religious affiliation -- so they can earmark funds to the right churches -- have worried many members. Churches have scrambled to explain the changes.

"Nobody has to get angry and leave the church," the Lutheran diocese of Braunschweig pleads on its website.

"I'm surprised because this isn't a tax rise but just a new procedure," Rev. Karl Juesten, the Catholic liaison official with parliament in Berlin, told the magazine Christ & Welt this week. "We should have become active earlier."

Discussing the large sums involved is difficult for the churches, maybe more so now for Catholics because Pope Francis says he wants "a poor church for the poor" and makes a point of living in a simple apartment and riding in ordinary cars.   Continued...