Taxes in Germany

Taxes in Germany

If you are a German resident you are liable to pay income tax on your worldwide income and assets. Non-residents only have to pay tax on the money that they earn in Germany. Germany doesn’t have a special tax regime for new expats.

Income Tax in Germany

Income tax is paid throughout the year. Employers deduct income tax from each paycheque. Adjustments can be made at the end of the year for possible under of over payments.

One of the ways that the German tax system differs to the UK tax system is that the amount of money you are taxed on depends on if your marital status. Married couples are taxed based on joint incomes as opposed to their individual incomes.

Corporation Tax in Germany

Corporate tax has a rate of 29%. Despite this being one of the highest in Europe it has not stopped Germany from being the headquarters or European headquarters of some of the biggest companies in the world.

VAT in Germany

VAT in Germany is 19%. This is marginally cheaper than the 20% rate charged in the UK. There is also a low VAT on certain products. This is a 7% levy on water, books, certain foods, agriculture, hotels and sports.

Tax returns in Germany

The tax year in Germany is the same as the calendar year meaning that the deadline for tax returns is 31 May. There a different tax brackets in Germany and it is important to know which bracket you fit into as this affects how much tax you will pay.

• Steuer Class 1: if your income exceeds € 17,300
• Steuer Class 2: if you are a single parent and are entitled to tax relief
• Steuer Class 3: if your income is less than € 8,652, or joint income (married or civil partnership) is less than € 17,300
• Steuer Class 4: if married and both partners are splitting their income
• Steuer Class 5: if a worker is married and partners situation relates to tax 3
• Steuer Class 6: If an employee has a second job

As you can see there is a lot to know about taxes in Germany. Although there is a lot to know, in reality, the tax system isn’t much more complicated than in the UK, it is just more important to factor in the wages of your partner.

Taxes are an important part of life for working people in Germany. To find out more about working in Germany click here.

Need help planning your move to Germany? If so, Sirelo can give you a hand. We recommend you take a look at the pages below -they will help you start organising your move to Germany on the right foot. 🙂