taxes in germany

taxes in germany

How does the tax works in Germany?

Everybody, who is living and working in Germany is fully tax liable. The income tax has to be paid on all income you earn within one calendar year. If you are employed, this is the so called income of employment. The tax is automatically deducted from your gross income by your employer. At the end of one calendar year, your can submit a tax declaration and claim income-related expenses such as advertising costs, some insurance costs and expenses for journeys to work. Usually you get refunded a part of the taxes you paid.

Tax in Germany is progressive. That means, that a higher income has a higher tax rate. There is a base tax-free amount for every taxpayer in Germany. Up to this amount there is no tax to be paid. In 2016 this base tax-free amount was 8.652 Euro. The minimum tax-rate is 14%, the maximum tax-rate is 42% or rather 45%.

The hight of the income tax depends not only on the income. Also the familiy situation will be considered. Marriage partners or couples with children pay a lower tax.

Useful Links

  • Here you can find detailed information about taxes: www.make-it-in-germany.com

  • An alternative to the tax consultant are the so-called "Lohnsteuerhilfevereine" that offers advice and assistance in completing your tax declaration for a moderate price. E.g. Steuerring

  • Information about the different tax classes: steuerklassen.biz