Taxes

If you have a contract of employment in Germany you have to pay taxes as well as the solidarity surcharge. They will be deducted automatically from your salary.

Income Tax

Taxation of an individual’s income is progressive meaning the higher the income the higher the taxes. The tax class is depending on whether or not you are married or have children. When you register at the local authority (Bürgeramt) of your place of residence please also apply for your tax identification number. You will receive a confirmation of this number by mail and have to provide a copy of it to your employer without delay. You will also being asked if you are affiliated to one of the major churches in Germany (s. “Church Tax” below).

 

Reimbursement of taxes:

By the end of May of the following year you have to file a tax declaration for the annual assessment of your income tax (“Einkommenssteuererklärung”) and submit it to the local tax authorities (“Finanzamt”). It can also be filed electronically using the Elster system (www.elster.de). It is advisable to take the time to fill out a tax declaration since some part of your tax payments is usually reimbursed. You will receive a printed slip from your employer stating the taxes and social security contributions you paid for the previous year, which you have to add to your tax declaration! After the tax authorities have checked your documents, you will receive a tax notification (“Steuerbescheid”) stating the amount of money which will be returned to you. In very rare cases it may occur that you have to pay additional tax. Married couples can file a joint tax return.

The German tax laws are fairly complicated and difficult to understand. It might therefore be a good idea to buy a guide for tax regulations or to consult a tax advisor (“Steuerberater”) or a cooperative association (“Lohnsteuerhilfeverein”).

 

Church Tax

Together with the income tax the German government collects church taxes (“Kirchensteuer”) if you are affiliated to one of the major churches in Germany (Roman Catholic and Protestant church). You can opt out of this tax by checking “none” when you register at the local authority. However, not being a tax-paying member most churches will deny you baptisms, church weddings or funerals.

 

Solidarity surcharge

Merging the “two Germanys” in 1990 was in part financed by this tax. Even though unification was long ago all corporations and individuals still have to pay this contribution.