A New Life in Germany: Paying taxes!


A New Life in Germany: Paying taxes!


The words tax and fun have never really had the best relationship, but do not let this stop you from delving into the complex but often times confusing world of the German Tax system. 


Filing a tax report in any country can be confusing at the best of times, but nevertheless, it is very important to do it correctly, and on time. The taxing of individual income accounts for well over a third of the German governments yearly revenue, and as such, is highly scrutinized by the government, and should be highly scrutinized (we hope!) by you.  


tax german steuer lohn study student studentin deutsch deutschland

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The minimum amount for a taxable income in Germany for 2017 is set at 8820 Euros per year (9000eur in 2018) and additionally a Werbungskostenpauschale (undeclared expense allowance of 1000eur in 2017). From that figure, the tax rate (without deductions) starts at 12% and progressively increases to 42% for individuals (45% for married couples) in the highest tax brackets.  


For a student, the earning opportunities are obviously limited. If you have a part time job, (or a mini-job as it is called here) the monthly income is capped at 450 euros. This will keep you well below the minimum tax bracket, but does not exempt you, by any means, from filing a tax report. 


But today we will concentrate on the two main types of income tax.  


Lohn = Wage 


Steuer = Tax  


The two main types of income tax which you may or may not have already been subject to. The first is the Lohnsteuer or the wage tax. A standard in most countries, the lohnsteuer is deducted by the company you work for, and paid to the government. 


tax steuer lohnsteuer einkommen income germany german deutsch deutschland 2017

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Einkommen = Income 


On the other hand, if you are an entrepreneur, freelancer or self-employed, you be subject to Einkommensteuer, which unlike the Lohnsteuer, is paid by the individual to the government. This requires you to file your return by May 31, in the year after the income was received. *Please note – Non-EU students are not permitted to engage in self-employed work.


Of course these are only the two main forms of tax collection, and every individuals financial situation is unique, so it pays to do your research. For more information, visit the Bundeszentralamt Für Steuer at http://www.steuerliches-info-center.de This is a government website and is a wealth of information regarding taxation in Germany for individuals, businesses and everything in between. It can be viewed in both German and English.  



Steuer steuern tax german germany deutsch deutschland einkommer lohn lohnsteuer

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Know your tax class! 


If this is your first year filing a tax report in Germany, then just remember, the Finanzamt offers advice free of charge, so you can go into your local Finanzamt, take a number, and speak to someone who is fully qualified to advise you on your individual tax situation.  


For students, or low-income earners, in each city there exists the Lohnsteuerhilfeverein, or accounting associations who can assist with filing a tax report for a very low price. They usually charge according to your income, (e.g. an income €0 - €10000 could cost around €50) while minimising the amount of time spent trying to figure it all out for yourself.  


Finally, if you are confident that you have a solid grasp of your own tax situation or your earnings are quite low, there are numerous online applications that can assist you in filing your tax report from home.  Elster offers a free online platform at Elster and will take you through the individual steps of your tax report. 


1. https://www.vlh.de/wissen-service/steuer-abc/was-bringt-mir-die-werbungskostenpauschale.html

2. https://www.ihk-muenchen.de/de/Service/Recht-und-Steuern/Steuerrecht/Einkommensteuer-K%C3%B6rperschaftsteuer/Grundfreibetrag/ 

3. www.uni-frankfurt.de/59377672/Flyer_Arbeiten_ENG.pdf

4. http://www.steuerliches-info-center.de

5. Your free online platform on www.elster.de/