Hey, hey, hey, my fellow expats in Germany! Today, we’re talking about something that’s probably not the most glamorous, but it’s something that we all need to understand if we want to live and work in this beautiful country: the German tax system.
Now, I know taxes might not be the most exciting thing to talk about, but trust me, it’s important to understand the basics so you can keep more of your hard-earned money in your pocket.
First things first, Germany has a progressive income tax system. What does that mean, you ask? Well, it means that the more you earn, the higher percentage of your income you will have to pay in taxes. For example, if you earn less than €9,408 per year, you won’t have to pay any income tax at all. But if you earn over €57,051 per year, you’ll have to pay a whopping 42% in income tax!
But don’t worry, there are also some deductions and allowances that can help you lower your tax bill. For example, if you have children, you can claim a child allowance. And if you have to commute to work, you can deduct some of your transportation costs from your taxable income.
Another thing to keep in mind is that in Germany, your employer will automatically deduct your income tax, along with your social security contributions and other taxes, from your monthly salary. So you don’t have to worry about filing your taxes on your own like you might have to do in other countries.
But that doesn’t mean you shouldn’t pay attention to your tax situation. It’s always a good idea to keep track of your income and expenses throughout the year, so you can get an idea of what your tax bill might look like come tax season.
And speaking of tax season, in Germany, it runs from January 1st to July 31st of the following year. So for example, if you earned income in 2022, you’ll need to file your taxes by July 31st, 2023.
Now, I know that was a lot of information to take in, but don’t worry, you don’t have to figure it all out on your own. There are plenty of resources out there to help you navigate the German tax system, including tax consultants and online resources like the official website of the German Federal Ministry of Finance.
So there you have it, a quick introduction to the German tax system. Remember, understanding your taxes is an important part of living and working in Germany, so don’t be afraid to ask questions and seek out help if you need it. Happy tax season, my friends!