German authorities plan electronic income-tax card

From...

By Rick Perera

(IDG) -- German residents might eventually be able to complete annual income-tax declarations entirely online, thanks to a pilot project being planned in the state of North Rhine-Westphalia (NRW).

The project, expected to run next year, seeks to develop an electronic tax card allowing employees' annual salary data to be transmitted directly to tax authorities, said a spokesman for the NRW Finance Ministry, who asked not to be named.

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Until now, a taxpayer has had to turn in a paper tax card once a year to his or her employer, who enters salary information and returns it to the employee. The taxpayer then sends the card to tax authorities when completing an annual return.

The new technology, being developed internally by the ministry's computing center, would build on an existing national pilot program called ELSTER (Elektronische SteuererklSrung, or electronic tax declaration) developed by Bavarian tax authorities. So far Germans have filed some 500,000 tax returns electronically using ELSTER software downloaded to their PCs, but they still have to mail their salary cards to authorities to complete the process.

A handful of private employers and state agencies are being recruited to test the new system in NRW. Replacing the paper tax cards with a virtual system could save a huge amount of time and effort, especially for big employers who have to print out salary data on stickers and then manually stick them to hundreds of cards, the spokesman said.

Legal roadblocks

"Because of data privacy laws, if an employer wanted to take part (in the electronic tax-card program) he would have to ask every individual employee for permission to pass on his personal data. With, say, 150 workers, that would be much too complicated," he said.

The ministry hopes a "pilot law" can be passed to allow the data transfer, but doesn't expect that to happen in the current legislative period.

"A realistic date for the test to start is mid-2003," the spokesman said.