1. What are the Tax Rates on Income in Germany?
Annual income of less than 8,004 € is not taxed at all. Income tax starts with 14.77% and gradually goes up to 44.31% (top tax rate applies to taxable income of more than 52,882 €). The amounts double for married couples filing joint returns.
2. For the First Part of the Year I Lived and Worked Abroad, then I Moved to Germany. Where do I Declare my Income as an Expat?
You need to declare your worldwide income in Germany for the full year. This is the case even if you moved to Germany on the last day of the year (calendar year = tax year in Germany) with the intention to stay in Germany for at least 6 months.
The filing requirements in your home country depend on the domestic tax rules in your home country and can vary from country to country. This is something you should check with someone who can advise you on taxes in your home jurisdiction.
3. I Left Germany Last Year. As an Expat Can I get my Taxes Refunded?
If you work only for part of the year in Germany and leave the country you have to file a tax return in Germany for this particular year. As a rule of thumb you can take it that you will get a refund if the level of income after your departure is lower than your German income. The same is the case if you did not work for some time at all after you left. If your level of income increased it can actually happen that you will have to pay extra in Germany.
4. What are the Deadlines for Filing an Income Tax Return in Germany?
An income tax return has to be filed by May 31st for the previous year. It is possible to file for extensions. If you work with an accountant you will automatically get an extension until the end of December.
5. I Live and Work in Germany. Do I Need to Report my Foreign Income in Germany as an Expat?
If you live and work in Germany you are usually taxable in Germany on your worldwide income. All your income needs to be reported to the German authorities. You may have some foreign income which you pay tax on in the country in which you earn your foreign income. To make sure you are not taxed twice on your foreign income Germany has concluded Double Taxation Agreements [link] with most countries.
7. Can I submit my German Tax Forms Online?
You can submit your German tax forms online at www.elsterformular.de
You need to make sure to download (for free) the most current version of the tax software onto your system. Alternatively you can also get the required software (for free) on CD-ROM from your local Finanzamt.
Please note that you also need to submit a paper version of your forms with your personal signature on them after you have submitted your details electronically. If you decide not to submit an electronic version, it is also acceptable to submit the paper version only.
8. How can I Find my Local Finanzamt?
To find out which Finanzamt you need to report your taxes to you can use this online tool: http://bffweb1.bff-online.de/
9. Where can I Find the German Tax Forms Relevant for Expats?
You can pick up a paper version in your local Finanzamt [link]. Alternatively you can also download the forms from the web:
11. What is a Tax Card – (“Lohnsteuerkarte”)? Where can I get a Lohnsteuerkarte and what will I as an Expat do with it?
A Lohnsteuerkarte is issued by your local authority where you register as a resident (Kreisverwaltung, Stadtverwaltung, Gemeindeverwaltung). It is only relevant if you work or plan to work as an employee (not self employed). Your employer will ask you for your Lohnsteuerkarte when you start working as this is the basis on which he will work out your monthly tax. The Lohnsteuerkarte will show your employer whether you are married, what tax class you are in, whether you have children and whether you are paying church tax.
12. What Expenses can I Claim in Germany Against my Income as an Expat?
By international standards tax deductible expenses are defined rather broadly. As long as you can show that you incurred an expense exclusively in the process of generating taxable income you will in most cases be in a position to make a tax claim. Outside of your income related expenses you can make a claim for expenses like insurance contributions, schooling, child care, donations or medical expenses (to name a few).
13. I will have Relocation Expenses when Moving to Germany. Can I make a Claim for this Against Tax in Germany?
If you can show that you relocated for work purposes you can make a claim for your relocation expenses. In most cases it is already sufficient to show that you took up work in Germany within a reasonable period after relocating.
14. I am not a German Citizen. How am I as an Expat Taxed in Germany?
Nationality is only in very rare cases a relevant factor for tax purposes. In most cases your tax status is linked to your tax residency. You take up tax residency simply by moving to Germany with the intention to stay for at least 6 months. As a tax resident individual you become taxable in Germany with your worldwide income.
15. I am (getting) Married. Is this Relevant for German Taxes?
In most cases getting married is relevant for tax purposes. Married couples can file a joint income tax return (they can also opt to file separate returns). If one spouse is on a higher level of income than the other spouse it is beneficial to file a joint tax return. This is because the partner with the higher income may be able to use up tax credits which the other partner is unable to use up as his / her income is not high enough. You can enjoy the full effect of this mechanism even if you are only married for one day during the tax year.
16. When are Taxes Payable in Germany?
Income tax is paid by employees on a monthly basis at source through a withholding mechanism. Self employed individuals pay their (estimated preliminary) income tax in advance on a quarterly basis. If you have filed a tax return you will receive an assessment (Bescheid) from your Finanzamt. From the date the assessment is issued you have one month to pay whatever tax is due according to the assessment.
17. How can I Avoid being Taxed Twice (i.e. in my home country and in Germany)?
Germany has concluded Double Taxation Agreements with most countries around the world (www.bundesfinanzministerium.de ). These Double Taxation Agreements determine which country has the right to levy tax on your income. They make sure you are not taxed twice on the same income by providing a system of tax exemptions or tax credits in a cross border context.
18. What is the Rate of Capital Gains Tax in Germany?
There is no separate tax on capital gains. Capital gains are subject to income tax unless they are completely exempt.
- there is no capital gains tax on a property used as a private home
Taxation of capital gains as of 1.1.2009:
- there is no capital gains tax on a property used as a private home