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Updated : 26/06/2017

Income taxes abroad – Germany

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I'm an employee

What income will be taxed in Germany?

  • You live in Germany for more than 6 consecutive months - You are considered ‘ordinarily resident' in Germany and, as such, are subject to unlimited tax liability and must pay tax on your worldwide income there.
  • You live in Germany for no more than 6 months - You are not considered tax resident, and pay tax only on income earned in Germany (limited tax liability).
  • You receive income from other EU countries - Make sure you are not paying tax twice on the same income.

How much will you pay?

What's left of your gross income in Germany after deduction of taxes?

Taxable income is determined by adding together all your various sources of income and subtracting any allowances and other deductions. The income tax due on this amount is then calculated using the following scale:

Bracket

Taxable income

Marginal rate in 2017

1

up to EUR 8 820

0 %

2

EUR 8 821 – EUR 54 057

14 % rising progressively to 42 %

3

EUR 54 058 – EUR 256 303

42 %

4

from EUR 256 304

45 %

There is also a solidarity surcharge, equivalent to 5.5 % of your income tax.

You must also pay church tax if you are affiliated to a religious community that charges it. Church tax is based on your income tax bill – it amounts to 8% of your income tax in Bavaria and Baden-Württemberg, and 9% in other parts of Germany.

Various deductions are allowed that may reduce the amount of tax you pay on your salary.

When and how do you pay?

Your employer deducts the income tax due from your wages and pays this to the tax office. You can get an idea of how much tax you will have to pay on your wages from the German Finance Ministry's interactive wage and income tax calculatorDeutsch (Interaktiven Lohn- und Einkommenssteuerrechner).

Your employer will also deduct your contributions to statutory social insurance schemes – pension, care, unemployment and healthcare insurance – direct from your wages.

Is your salary your only source of income? – If so, you do not normally have to file an annual tax return. However, there are exceptions, e.g. when income tax is deducted simultaneously by multiple employers.

Want to file a return to benefit from specific tax allowances? - Send the return to the relevant tax office before the end of May of the following year.

How to appeal / complain

Your local tax officeDeutsch (Finanzamt) will provide information on your rights and obligations. You can obtain detailed advice from tax consultants or solicitors, who can also represent you.

You may challenge any decision on taxation at the local tax office, and subsequently, if need be, take your complaint to the tax tribunal. You have one month to challenge a decision.

Web links

German Government – Information on income taxDeutsch

I'm self-employed

What income will be taxed in Germany?

  • You live in Germany for more than 6 consecutive months - You are considered ‘ordinarily resident' in Germany and, as such, are subject to unlimited tax liability and must pay tax on your worldwide income there.
  • You live in Germany for no more than 6 months - You are not considered tax resident, and pay tax only on income earned in Germany (limited tax liability).
  • You receive income from other EU countries - Make sure you are not paying tax twice on the same income.

How much will you pay?

What's left of your gross income in Germany after deduction of taxes?

Taxable income is determined by adding together all your various sources of income and subtracting from that amount any allowances and other deductions. The income tax due on the amount established is then calculated using the following scale:

Bracket

Taxable income

Marginal rate in 2017

1

up to EUR 8 820

0 %

2

EUR 8 821 – EUR 54 057

14 %

3

EUR 54 058 – EUR 256 303

42 %

4

from EUR 256 304

45 %

You can get an idea of how much tax you will have to pay on your wages from the German Finance Ministry's interactive wage and income tax calculatorDeutsch (Interaktiven Lohn- und Einkommenssteuerrechner)

There is also a solidarity surcharge, equivalent to 5.5 % of your income tax.

You must also pay church tax if you are affiliated to a religious community that charges it. Church tax is based on your income tax bill – it amounts to 8% of your income tax in Bavaria and Baden-Württemberg, and 9% in other parts of Germany.

When and how do you pay?

If applicable, you must make advance payments (based on your income from the previous year) to offset your expected final tax liability, if these advance payments have been determined by the tax office.

What if you have set up a new company? In that case, the tax office will require you to make advance payments based on your expected earnings. The tax office will determine the amount of tax payable on that basis.

In any case, you must file a return with the relevant tax office by the end of May of the following year.

How to appeal / complain

Your local tax officeDeutsch (Finanzamt) will provide information on your rights and obligations. You can obtain detailed advice from tax consultants or solicitors, who can also represent you.

You may challenge any decision on taxation at the local tax office, and subsequently, if need be, take your complaint to the tax tribunal. You have one month to challenge a decision.

Web links

German Government – Information on income taxDeutsch

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