Income Tax Benefits in Germany against the Backdrop of “Tax Expenditures” Definition
DOI:
https://doi.org/10.15611/pn.2025.4.04Keywords:
income tax, tax benefits, expenditures, Germany, revenue lossAbstract
Aim: The primary aim of this article is to examine income tax expenditures in Germany and assess the extent to which they integrate into the global concept. It also analyzes the key tax expenditures, comparing them with other tax preferences while highlighting the revenue loss associated with their implementation.
Methodology: The author employs the comparative method in economics and law to explore the essence and functional aspects of the so-called tax expenditures. The work offers a broader international perspective while focusing on a single country to identify potential future transplants and examine their economic implications.
Results: Tax expenditures hold substantial practical significance, serving as key instruments in fiscal policy. Their application enables governments to achieve economic and social objectives while offering an alternative to direct public expenditures. The approaches adopted by various European Union countries – particularly those with well-established traditions in this field – offer valuable insights for developing broader recommendations at the Community level.
Implications and recommendations: Germany was among the pioneers in designing tax benefits that align with the global conceptualization of tax expenditures. To ensure good practices for a common European approach, elements of this concept should be incorporated into the definition, classification, and essence of a unified framework. However, since income tax benefits still vary significantly across the EU, the adoption of a coordinated model should still take some this diversity into account.
Originality/value: The article examines tax expenditure issues, which are occasionally discussed in Polish economic literature but primarily from the perspective of concepts that emerged in the United States in the 1960s/1970s. While it partially follows this trend, it also considers the contribution of a second country that played a significant role in developing the definition and classification of tax expenditures
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Copyright (c) 2026 Małgorzata Magdalena Hybka
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
Accepted 2025-08-29
Published 2026-01-12
