Germany’s Church Tax

A couple days ago, the Wall Street Journal highlighted (subscription required[fn1]) the accelerating loss of members certain churches in Germany are facing. The popular press is placing the blame at least partly on the new administration of Germany’s Church Tax.

What? you ask. A church tax? What’s that?

So glad you asked.

Roots of Germany’s Church Tax

Germany’s Church Tax finds its roots in the Reformation. In the broadest strokes:[fn2] Some Germanic cities accepted Lutheran ideas; if a city council liked Lutheran ideas enough, it seized property belonging to the Catholic church. Deprived of its property—including productive property from which the church earned money—Catholic churches in Germany faced real problems supporting themselves. Finally, in the Religious Peace of Ausburg, the ruler of each Germanic region was tasked with selecting Lutheranism or Catholicism within his territory and supporting the chosen church.

As Germans started migrating to cities and towns,though, agricultural and productions tithes, which had formerly supported local churches, became less and less relevant and were eventually abolished. Local governments had to find new ways to support churches and, eventually, turned to taxes.

Fast-forward to the post-WWI Weimer Republic: Germany codified the Church Tax at the federal level. And, as best as I can tell, that Church Tax and today’s Church Tax are largely the same.

How the Church Tax Works

As I understand it, the way the Church Tax works is this: religious organizations in Germany can qualify to be treated as public law corporations. Public law corporation status provides a number of benefits, including exemption from income, inheritance, and gift taxes, the right to employ clergy as civil servants in various public facilities, and exemption from bankruptcy laws. In addition, public law corporations can impose the Church Tax on their members.

Churches actually get to draft their own tax ordinances (though the ordinances must be approved by the state). Generally, state statutes provide forms that these Church Taxes can take, including income, wealth, and property taxes. Though churches are technically responsible for collecting the tax themselves, they can—and usually do—enlist the state’s help. The government collects the tax through its wage withholding, then, after keeping a service fee, remits the rest of the Church Tax to the relevant church. When the Church Tax is imposed on a member’s income, it’s levied as 8 to 9 percent of her federal income tax liability, which amounts to between 3 and 4 percent of her income.

What’s Made the Church Tax Particularly Controversial Recently?

Two things: first, in 2012, a German court held that churches could bar people who stopped paying the tax (by civilly withdrawing from the church) from participating in church activities, including becoming godparents and joining church-run clubs.

Second, church members will no longer be able to avoid paying the Church Tax on their capital gains. While technically it has always been imposed on capital gains, in the past, banks waited for customers to volunteer their religious affiliation. Under new rules, banks are required to report their customers’ affiliation, rather than wait. That is, while the underlying law hasn’t changed, the enforcement mechanism has just improved.

So What Does This Have to Do With the Mormons?

Not a lot, right now. The Catholic and Evangelical churches in Germany are the biggest users of the Church Tax mechanism, and some Jewish congregations use it, too. The Mormon church is a public law corporation, but, as best I can find, doesn’t use the Church Tax mechanism.

But imagine we did. Would the financial savings be worth formal disaffiliation? See, this seems like a really easy tax to avoid—in fact, it is a really easy tax to avoid, if you believe that religious affiliation doesn’t matter. But for believers, there are frictions that impede the complete evasion of the Church Tax. That is, if being a member of a religious community matters, then there is a cost to the disaffiliation, and individual members, I suppose, have to decide which cost is more salient to them.Ultimately, for me, the salvific ordinances, combined with the sense of community engendered in formal religious affiliation, would be worth paying the tax.


Like I said, I’m not super-familiar with German law or culture (or taxes); most of the substance of this post comes from an academic article and news reports I’ve read over the last couple days. So tell me what I’m missing. And tell me about the church taxes you’re familiar with. (It’s worth noting that a number of other European countries also have church taxes, albeit with different designs and different histories. Also, as Prof. Hoffer points out, church taxes were a relevant part of American history.)

[fn1] If you don’t subscribe to the WSJ, you can get relevant excerpts from the article at Paul Caron’s TaxProf blog.

[fn2] And I seriously mean the broadest strokes: German history is not my specialty, but it’s important to understanding what may be happening to church membership in Germany. Any history I don’t link to in the body of the post comes from Stephanie R. Hoffer’s “Caesar as God’s Banker: Using Germany’s Church Tax as an Example of Non-Geographically Bounded Taxing Jurisdiction.”


  1. This is a topic that should be covered in the MTC for missionaries going to Germany since it came up all the time, and we had to figure out the ins and outs of it by ourselves, along with the details about the legal standing of the Church in Germany. It really would have helped to have the information up front.

  2. Last Lemming says:

    So What Does This Have to Do With the Mormons?

    For Mormons, the biggest deal is trying to get new converts to austret (literally, escape) from their previous church so that they no longer pay that church’s tax. This has to be done at a government office. One would think that to be a no-brainer, but some have declined either due to inertia, as a hedge of sorts, or so that they can tell their family members that they are still officially Katolisch or Evangelisch. In the late 70’s is was strongly encouraged by the missionaries, but failure to austret did not disqualify one from baptism.

  3. Amy, there’s a ton of stuff that should be covered in the MTC. And I totally agree that unfamiliar legal regimes should be one of those things.

    Interesting, Last Lemming. Thanks.

  4. But for believers, there are frictions that impede the complete evasion of the Church Tax.

    In addition to ethical and emotional speed bumps, churches in Germany have a potent statutory tool to impede evasion, the so-called “Heathen Tax” (Heidensteuer aka Kirchgeld) that applies in cases where 1) spouses belong to different religions (or one is unaffiliated); 2) the member either has no or less income than the non-member; and 3) the couple files jointly. The tax rate is about 1/3 of the Church Tax, and the churches that collect it argue that the whole family benefits by having a member in the church and thus have incurred a debt for services rendered. Let this be a lesson to anyone who feels like the Mormons are no respecters of boundaries–it could be worse!

  5. Following out of fascination.

  6. Fascinating, Peter, thanks. Every new thing I learn about the Church Tax makes me think I need to spend more time learning about it.

  7. Kevin Barney says:

    Really interesting stuff.

  8. The bloggernacle returns to its bored-lawyers-overthinking-things roots! ;-) I mean that in a good way. This is awesomely geeky.

  9. Sam, I’m more than a little bit disappointed that you are not already versant in German ecclesiastical taxation. – 10 points.

  10. When I lived in Germany I was told the following; Stalin dies and arrives at the Pearly Gates asking to be let into Heaven. St. Peter said, “You can’t come in you are a mass murderer” Then Stalin looking through the gate sees Hitler in Heaven. He demands to know why another mass murderer like Hitler got in. St. Peter answers, “He’s here because of the millions of dollars the Church receives from the Austrian church tax.”
    This German told me that when Nazi Germany annexed Austria in 1938 they introduced the church tax to Austria. He said because of the Nazis the Austrians are still paying the church tax to this day..

  11. Jonathan Green says:

    Sam, some important context is that the Lutheran and Catholic churches are providers of important and even basic educational and social services, such as most preschools, that are used by almost all German citizens. So the government has a stake in seeing funding for those services continue to reach its destination without interruption.

  12. Thanks, Jonathan. That is valuable context.

    That said, it raises some significant tax policy and design questions in my mind. The principal one: a Church Tax, imposed solely on the members of a certain church, seems like an poor way of raising revenue for general services, unless church membership is correlated with wealth. That is, if poor people are generally church members and the rich are not, the tax is regressive (that is, it costs more to the poor than the rich). If generally members are rich, on the other hand, it may be progressive.

    But even there, it’s a blunt instrument: it will capture some poor people, too. I think the Church Tax is a fine way to collect revenue for church operations (and Prof. Hoffer thinks taxing extrajurisdictionally by reaching members of groups is an interesting idea), but if the purpose is to provide social welfare and services, it seems better for the government to subsidize church operations out of its general revenue. Though I suspect one of the reasons for the Church Tax is the inertia that legal regimes in general, and, quite often tax regimes in particular, face: once you have a tax in place, people grow familiar with it, it raises revenue, and it’s hard to switch it out entirely.

  13. Jonathan Green says:

    Sam, I suspect you’re exactly right about legal inertia.

  14. Aw, this was an exceptionally nice post. Taking a few minutes and actual effort to produce a really good article… but
    what can I say… I put things off a whole lot and never
    seem to get anything done.

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