Germany’s Richest 1%: Millionaire Count Surges Amid Pandemic

Germany's Richest 1%: Millionaire Count Surges Amid Pandemic

According to the Federal Statistical Office, in 2021, approximately 34,500 of the 194,000 tax-payers in Germany with a minimum of one million euros in taxable income, a number that represents an 18% or nearly 5,200 increase from the first pandemic year of 2020.

While a part of this above-average growth can be attributed to the higher inflation in 2021, the increase in the number of millionaires remains substantial, at 12%, when the income thresholds are deflated using the consumer price index. The pandemic’s special effects in 2021 may also have contributed to this development.

For 20,600 of these taxpayers, business income was the primary source of income, while 6,500 received their income mainly from non-self-employed work and 5,300 from self-employed work. Other income sources played a subordinate role, with income from capital assets only partially represented since the introduction of the withholding tax in 2009. The average income of the millionaires, at 2.8 million euros, was slightly higher than in the previous year.

In total, the 43.3 million taxpayers in Germany had an income of 2 trillion euros in 2021, with the number of taxpayers increasing by 1.3% compared to the first pandemic year of 2020, after having decreased for the first time in over a decade in 2020. The income of all taxpayers was 6% higher in 2021 compared to the previous year, at 2 trillion euros, while the total tax revenue, including the income tax and the withholding tax, rose by 7% to 357 billion euros.

Germany’s tax system is progressive, with the tax rate increasing with the income. This means that the taxpayers are differently burdened. In 2021, the top tax rate of 45% was applied to annual incomes of over 274,613 euros, or over 549,226 euros for jointly assessed individuals, affecting nearly 0.3% of all taxpayers, who accounted for 7.8% of the total income and 15.7% of the total tax revenue.