Germany Proposes to Lower Income Tax to Attract Foreign Talent
The German government is planning to implement a foreign worker’s tax relief measure to attract the top brains of the world. It is also planning to increase the number of immigrant skills workers in Germany by creating a tax rebate of 30%, 20% & 10%. The taxable income of the skilled foreign professionals working in Germany will be lowered in the first three years of employment. The minimum and maximum salary limits are yet to be determined and clarified by the German government.
“We are creating a tax rebate for foreign professionals during their first three years in Germany. There will be rebates of 30 per cent, 20 per cent, and 10 per cent for those people who come here as qualified specialists.” - German Finance Minister Christian Lindner
The Criticisms of the Measure
However, some critics have considered this to be “socially exclusive”. This plan was not well-received by the people as this might be discrimination against the native workers. The criticisms came in from different ranks of government bodies stating that the measure goes against the German principle of “Fair & Equal Treatment” to all.
The German labor union criticizes the plan, calling it a “Two-class taxation”.
On the other hand, the economists are of the opinion that Germany is facing a massive shortage of skilled workers due to an increase in older people. This posses a big risk to the German economic growth and wellbeing. Economists further argue that Germany would face economic growth of less than 1% without sufficient workers.
Supporters of this measure considered this measure to be an effective strategy to attract the top foreign talent by making it financially attractive for them.
“Worth trying to attract people to Germany this way” – Economy Minister Robert Habeck
Germany’s Challenge of Attracting and Retaining Skilled Workers
Amidst Germany facing a massive skill shortage, it has fallen from 12th to 15th place on the list of top work destinations as per OECD (Organization for Economic Co-operation and Development). One of the top challenges is addressing the language barrier. While Germany continues to attract foreign workers, prospective workers are reluctant to move to Germany due to language barriers.
Germany’s population is rapidly ageing, leading to a decline in the available workforce. As more people retire, there are fewer individuals to fill skilled positions. The country has experienced a decline in birth rates, resulting in a smaller pool of young, educated workers.
Final Thoughts
While the proposed taxation measures have received many criticisms, it is a potential opportunity for Germany to have top foreign workers and contribute to their economy in the coming years. To ensure the success of the measures, it’s crucial that Germany maintains a perception of fair and equitable treatment for all workers, both domestic and foreign. Any perceived discrimination or preferential treatment could undermine the attractiveness of the country to foreign talent.
Let us know what you think about the tax rebate plan of Germany to attract foreign labors! Comment down below your thoughts.
