It can be challenging to fully understand the German tax system when you first arrive in the country to work. But the good news is – once you understand your tax responsibilities and entitlements – you can potentially save yourself a lot of money!
That’s why Make it to Germany have partnered with Taxback! Taxback specialise in preparing German tax returns and securing German tax refunds for their clients. The team at Taxback have created this blog with everything you need to know as an expat working and paying tax in Germany!
Simply put, it depends.
As an expat in Germany, your rate of taxation will depend on your level of income.
Germany uses what’s known as a progressive tax system, meaning that the higher your income, the more tax you will pay.
In 2023, the tax rates for single individuals are as follows:
- Income up to €10,347: 0%
- Income from €10,347 to €58,597: 14% – 42%
- Income from €58,598 to €277,825: 42%
- Income over €277,827: 45%
If you are married or in a civil partnership, you’ll be able to file your taxes jointly, which may result in a lower tax rate due.
Additionally, Germany offers several deductions and credits in their tax system, such as for children, education expenses, and charitable donations, which can help to offset your tax liability.
Generally, if you earned less than €10,347 (as of 2023) or your employer withholds the correct amount of tax from your wages, you do not necessarily need to file a tax return.
However, if you have any other sources of income or want to claim deductions, you will need to file one. You will also have to file a German tax return to claim your German tax refund.
The tax filing deadline is 2 October and it’s important to file your taxes on time to ensure you have a clean tax record in Germany.
You’ll need to gather several documents in order to successfully file a tax return.
- Your income tax statement (Lohnsteuerbescheinigung)
- Receipts for any deductions or expenses that you are claiming, such as work-related expenses or charitable donations
- Statement of Earnings or pay slips accounting for your income from outside Germany
You can file your tax return on your own, however, many people who are new to the country find this difficult. That’s why you can hire a tax advisor like Taxback to help you!
Taxback will ensure that your return is fully compliant with the German tax authorities, and help you maximize your deductions and credits and claim your MAXIMUM tax refund!
Every year, thousands of expats in Germany are entitled to a tax refund.
There are many reasons why you may be due tax back. For example, you will be due tax back if your employer deducted too much tax from your income during the year or you are entitled to additional credits and deductions.
The average German tax refund is €1,020 so it makes a lot of sense to check how much you’re owed.
The only way to claim your tax refund is to file your tax return each year.
When you are working in Germany, you will be required to contribute to the German pension system (Rentenversicherung).
These contributions will be automatically deducted from your paycheck, and usually amount to 9.75% of your salary.
The good news? Once you have left Germany for at least two years, you may be eligible to apply to get your pension payments back!
In order to be eligible to claim a German pension refund, you must be a resident of a non-EU country (excluding Turkey, Israel and the former Yugoslavian states) and you must have paid contributions into the German Pension Fund for less than 5 years.
The Taxback team can help you to claim back your pension contributions. In fact, the average German pension refund for Taxback clients is €5,410! Learn more about their service here.
True, you can always file your tax return and submit it to the German tax authorities by yourself.
But if you do file alone, it’s important to remember that it will be your responsibility to ensure that your documents are completed correctly.
Make it to Germany have partnered with Taxback to make the process of claiming your German tax refund super easy!
The Taxback team will take care of all the paperwork for you, ensure you are fully tax compliant and that you receive your maximum refund straight to your bank account.
Remember, the average refund is €1,020 and Taxback’s service is ‘no refund, no fee’ so it’s worth checking out how much you’re owed.