Income Tax Guide
Whether or not the company you work for is German, as a German resident you must pay taxes. Determining whether you need to also pay taxes on that same income in your home country depends on the agreement that has been reached between that country and Germany.
At each pay cycle, your employer will remove your Income Tax and Solidarity Tax. If relevant, they will also remove your Church Tax at this time.
Income Tax
Income Tax is calculated on your gross pay and is dependent on you and your wife’s/husband’s income.
| Tax% | Tax Base (EUR) |
| 0% | Up to 8,004 |
| 14% | 8,005-52,881 |
| 42% | 52,882-250,730 |
| 45% | 250,731 and over |
This calculation does not incorporate Solidarity Tax (5.5%) or Church Tax (8%-9%).
Tax Returns
Everybody has to fill in a tax return. Exceptions to the rule are:
- Students,
- Unemployed people who have received social security during the tax year in question, and
- Retired people without any investment income.
As the tax system is one of the most complex in the world with six different tax brackets, differences depending on the type of employment contract that you have, multiple deductions and double tax treaties – it would be strongly advisable to seek professional advice.
The tax year runs from 1 January to 31 December. The deadline for filing your tax return in Germany is always 31 May of the following year. This can be extended until the end of September if a tax advisor is filing the tax return or on written confirmation from the tax office.
Couples may file tax returns on the same form, and married couples are eligible for deductions in line with their lower progressive tax rates and therefore pay less tax than single persons or married persons filing separate tax return forms.
Tax forms can be obtained from the local tax office (Finanzamt) or might be sent directly to the workplace. Tax returns may also be made online using the electronic filing system, Elster (only in German).
Ensure that you fill out all tax forms, covering all types of income including: employment, interest on bank accounts, shares and dividends, capital investments and other sources of money-earning. Within the paper version, there is an attachment “N” (Anlage N). Here you can claim deductions including receipts, bills and invoices. All residents may make deductions totalling up to €2,100, or over this amount, as long as the appropriate original invoices and receipts can be presented.
The tax office will then determine your entitlements within the next few months with a final tax calculation. This is called the Bescheid über Einkommensteuer (notification of income tax).
You will also need to obtain an income tax card (Lohnsteuerkarte) from the local registration office (Einwohnermeldeamt) located at your local town hall (http://www.berlin.de/buergeramt/ Only in German). This card documents tax payments and insurance contributions over the year and must be sent to the tax office along with your completed tax return forms.
