EFFICIENCY OF PERSONAL INCOME TAXATION MODELS IN GERMANY AND UKRAINE

Abstract

The article is devoted to a comparative analysis of the efficiency of personal income taxation models in Germany and Ukraine. The study examines in detail the specifics of the German model of personal income taxation, particularly the structure of tax classes, which influence the final tax burden depending on the taxpayer's marital status and income level. The progressive personal income tax scale in Germany is analyzed, which in 2025 ranges from 14% to 45%, and additional mandatory payments are also considered: the solidarity surcharge, which mainly applies to high-income individuals and actually increases the top tax burden to 47.5%, as well as the church tax (8‒9%). The article examines the features and rates of mandatory social contributions in Germany and Ukraine. Key differences are identified in the approaches to financing social insurance systems, particularly in the distribution of the financial burden between employees and employers, as well as in the overall level of tax pressure. To assess the fiscal efficiency and tax fairness of personal income tax, a comparative analysis of the top personal income tax rates in EU countries and Ukraine is conducted. The research employs methods of analysis and synthesis, comparative analysis, system-functional approach, tabular and graphical analysis, abstract-logical method, and the method of analogies. The study concludes that the German tax system provides an individual approach to personal income taxation, takes into account the socio-economic status of taxpayers, and promotes a fair distribution of the tax burden. In contrast, Ukraine applies a proportional model of personal income taxation, which does not comply with the principle of tax fairness, as it does not take into account the solvency and social circumstances of taxpayers. The study establishes that such a model weakens the redistributive function of taxation and undermines trust in the tax system. Special attention is paid to mechanisms ensuring fiscal efficiency, in particular, the issues of digitalization of tax administration. It is established that Germany has a highly developed digital tax infrastructure that ensures transparency, reliability of income accounting, efficiency of procedures, and minimization of tax evasion. In Ukraine, however, despite some positive developments, the process of digitalization of tax administration is still in its formative stage and requires an expansion of institutional reforms to achieve high fiscal efficiency. The results of the study make it possible to formulate recommendations for improving tax policy of Ukraine, taking into account the best practices of the German tax system. The author proposes conceptual directions for reforming the mechanisms of personal income taxation in Ukraine aimed at enhancing tax discipline, ensuring social balance, and strengthening the fiscal sustainability of the state.