Taxes in Germany

Germany has one of the highest tax rates in the world. Good for you, that Germany also offers a lot of tricks to lower your bills for taxes in Germany. You can save every year!

Taxes in Germany In A Nutshell

The German tax system is designed to provide a robust and comprehensive social welfare system, with the aim of ensuring that everyone has access to basic services and support. Taxes in Germany are used to fund a range of public services, including healthcare, education, infrastructure, and social security programs. The country has a high standard of living and taxes play a crucial role in maintaining this standard.

One of the most important taxes in Germany is income tax. This tax is calculated based on a progressive tax rate system, which means that people with higher incomes pay a higher percentage of their income in taxes. The income tax rate starts at 14% and rises to 45% for the highest incomes. In addition to income tax, a solidarity surcharge is levied on high earners, which is used to finance the costs of German reunification. The solidarity surcharge is currently set at 5.5% of income tax.

Value-added tax (VAT) is another important tax in Germany. VAT is a tax on goods and services and the standard rate is currently set at 19%. There is also a reduced VAT rate of 7% that applies to certain goods and services, such as food, books, and cultural events. VAT is collected by businesses and paid to the state.

Although taxes in Germany can be high, there are ways to save taxes. Taxpayers can claim deductions and credits, e.g. for donations to charities, contributions to a private pension scheme, or investments in real estate. In addition, you can deduct certain expenses such as health and education costs from your taxable income. In addition, workers in Germany can claim various tax-free benefits, such as travel allowances or childcare subsidies. These benefits can help to reduce taxable income and thus the tax burden.

Self-employed persons, pensioners, and landlords must file a tax return if their income exceeds the basic tax-free amount. There are also a number of other circumstances in which a tax return must be filed, including if you worked for two employers at the same time or received wage replacement benefits. Ordinary employees are not required to file a tax return, but this can be beneficial and lead to the payment of interest on refunds. Even if there is no refund, you can appeal and withdraw your tax return within one month.

Overall, taxes play a crucial role in the German social system and contribute to the country’s high standard of living. Although taxes can be high, there are ways to save on taxes and it is important to keep up to date with tax laws and regulations to ensure tax compliance. This is where PerFinEx comes in, we will keep you updated on everything important regarding taxes in Germany.

Our latest taxes videos

In our YouTube playlist about taxes in Germany, we go into detail about the German tax system. We explain how the system works, how to make your tax declaration in Germany, what you can do about it, and how you can save taxes in Germany by investing.

Our latest Taxes Blog Posts

In our blog, we cover everything there is to know about taxes in Germany in an easy-to-understand way. Among other things, we inform you about current events, misstatements, errors, and changes in the German tax system made by the German government.

German Tax Guide 2024
German Tax Guide 2024

Filing your taxes in Germany will get you on average 1.095€ from Finanzamt. 🤑 In this German tax guide 2024, we will explain everything you need to file your taxes.

Avoid Taxes When Investing In Germany - Vorabpauschale
Avoid Taxes When Investing In Germany – Vorabpauschale

If you are investing in ETFs or mutual funds in Germany, you may have to pay capital gains taxes on profits this year, even if you did not make any profits. 😱 Why is this so and how to avoid taxes when investing in Germany.

Our latest Taxes Blog Posts

In our blog, we cover everything there is to know about taxes in Germany in an easy-to-understand way. Among other things, we inform you about current events, misstatements, errors, and changes in the German tax system made by the German government.

German Tax Guide 2024
German Tax Guide 2024

Filing your taxes in Germany will get you on average 1.095€ from Finanzamt. 🤑 In this German tax guide 2024, we will explain everything you need to file your taxes.

Calculate your personal taxes in Germany

With our tax calculators, you can conveniently work out everything about taxes in Germany. Due to the marginal tax rate in Germany, the exact tax burden is often difficult to understand. Therefore, you have the possibility to calculate this with our calculators.

Income Tax Calculator

Calculate the income tax you have to pay in Germany based on your income.

Solidarity Tax Calculator

90% of German taxpayers don't pay solidarity tax anymore. Do you have to?

Kurzarbeit Calculator

In Kurzarbeit you earn a lower gross salary. How are net salary & taxes changing?

Wundertax

Go to Wundertax to submit your tax declaration

TaxFix

Go to TaxFix to submit your tax declaration

SteuerGo

Go to SteuerGo to submit your tax declaration

Calculate your personal taxes in Germany

With our tax calculators, you can conveniently work out everything about taxes in Germany. Due to the marginal tax rate in Germany, the exact tax burden is often difficult to understand. Therefore, you have the possibility to calculate this with our calculators.

Income Tax Calculator

Calculate the income tax you have to pay in Germany based on your income.

Solidarity Tax Calculator

90% of German taxpayers don't pay solidarity tax anymore. Do you have to?

Kurzarbeit Calculator

In Kurzarbeit you earn a lower gross salary. How are net salary & taxes changing?

Wundertax

Go to Wundertax to submit your tax declaration

TaxFix

Go to TaxFix to submit your tax declaration

SteuerGo

Go to SteuerGo to submit your tax declaration

Are you looking for something specific?

Saving Taxes in Germany

Saving taxes in Germany can be difficult and requires a deep understanding of the country’s complex tax system. The process of saving tax requires careful planning and consideration of various factors such as income, expenses, investments, and deductions.

Fortunately, various strategies and tools are available to reduce tax liability in Germany. These include, among other things, investing in tax-efficient investment products. Of course, it is also important to note that the options offer various advantages and disadvantages. Moreover, such tax-saving measures should not be seen as a one-off event, but as an ongoing process.

On the following page of ours, you will find everything you need to know about tax saving in Germany. Here we discuss possible strategies, misconceptions, innovations, and more.

Our latest videos on saving taxes

In our YouTube playlist on saving taxes in Germany, we show you ways to save taxes in Germany and what you need to consider when investing for tax-saving purposes in Germany. We also clear up myths surrounding tax saving.

Our latest Blog posts on saving taxes

In our blog posts on saving taxes in Germany, we show you ways to save taxes in Germany and what you need to consider when investing for tax-saving purposes in Germany. We also clear up myths surrounding tax saving.

Avoid Taxes When Investing In Germany - Vorabpauschale
Avoid Taxes When Investing In Germany – Vorabpauschale

If you are investing in ETFs or mutual funds in Germany, you may have to pay capital gains taxes on profits this year, even if you did not make any profits. 😱 Why is this so and how to avoid taxes when investing in Germany.

Our latest Blog posts on saving taxes

In our blog posts on saving taxes in Germany, we show you ways to save taxes in Germany and what you need to consider when investing for tax-saving purposes in Germany. We also clear up myths surrounding tax saving.

Calculate your tax saving potential

With our tax calculators, you can easily work out your tax burden in Germany. With the help of this, you can develop a feeling for how much tax/money you could actually save if you, for example, invest in tax-efficient investment products.

Income Tax Calculator

Calculate the income tax you have to pay in Germany based on your income.

Solidarity Tax Calculator

90% of German taxpayers don't pay solidarity tax anymore. Do you have to?

Calculate your tax saving potential

With our tax calculators, you can easily work out your tax burden in Germany. With the help of this, you can develop a feeling for how much tax/money you could actually save if you, for example, invest in tax-efficient investment products.

Income Tax Calculator

Calculate the income tax you have to pay in Germany based on your income.

Solidarity Tax Calculator

90% of German taxpayers don't pay solidarity tax anymore. Do you have to?

Learn More About Taxes in Germany On Social Media

Social media can be a valuable source of information when learning more about taxes in Germany. By following our accounts, you can get helpful tips, news, and resources related to taxes in general and regulations in Germany.

Tax Declaration in Germany

Filing a tax declaration in Germany can be a daunting task for many. The process involves navigating complex tax laws and regulations, which can be overwhelming, especially for those unfamiliar with the German tax system. However, filing tax returns in Germany is an important task that brings financial benefits for most.

To make the tax return process more manageable, our page provides a general overview of tax returns in Germany. For this, we go into everything important to consider when it comes to your taxes in Germany. Among other things, we discuss helpful tipsmisconceptions, and more.

Our latest tax declaration videos

In our YouTube playlist about tax declaration in Germany, we show you why it can make sense to prepare a tax return. Additionally, we explain to you exactly what you need to pay attention to when filing your taxes in Germany.

Our latest tax declaration blog posts

In our blog posts about tax declaration in Germany, we show you why it can make sense to prepare a tax return. Additionally, we explain to you exactly what you need to pay attention to when filing your taxes in Germany.

German Tax Guide 2024
German Tax Guide 2024

Filing your taxes in Germany will get you on average 1.095€ from Finanzamt. 🤑 In this German tax guide 2024, we will explain everything you need to file your taxes.

Our latest tax declaration blog posts

In our blog posts about tax declaration in Germany, we show you why it can make sense to prepare a tax return. Additionally, we explain to you exactly what you need to pay attention to when filing your taxes in Germany.

German Tax Guide 2024
German Tax Guide 2024

Filing your taxes in Germany will get you on average 1.095€ from Finanzamt. 🤑 In this German tax guide 2024, we will explain everything you need to file your taxes.

File your taxes with one of the following providers

The following options will direct you to the tax software mentioned. With them, you can file your taxes as conveniently as possible. If you choose one of these options, we will receive an affiliate commission

Wundertax

Go to Wundertax to submit your tax declaration

TaxFix

Go to TaxFix to submit your tax declaration

SteuerGo

Go to SteuerGo to submit your tax declaration

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FAQ about taxes in Germany

How much tax do you pay in Germany?

In Germany, you have to pay a progressive tax rate. This means that your personal tax rate increases as your income rises. The beginning of the income tax rate is in the zero zone, the basic tax-free amount (10.347€ in 2022). No income tax is due here. After that, the income tax rate starts at 14% and goes up to 42%, which starts at an income of 58.827€. This 42% applies up to an amount of 277.826€. From here the top tax rate of 45% on your income starts.

How does the German tax system work?

The tax system in Germany works similarly to how it does in other, westernized countries. You are required to pay income taxes. This is automatically deducted from your payslip by your employer on a monthly basis throughout the year. Afterwards, a tax declaration is typically filed, or adjustments are made to reconcile any discrepancies.

How can I reduce my taxes in Germany?
  1. Capital-forming Benefits
  2. Non-cash Benefits
  3. Optimize your health insurance
  4. Leave the church
  5. File your tax declaration

You can find an exact explanation in our article or YouTube Video.

What are the tax categories in Germany?
  1. Single, separated/divorced, widowed
  2. Single parent, living separately
  3. A married person with high income (spouse has to be 5)
  4. A married couple with equal/similar income
  5. A married person with no or low income (spouse has to be 3)
  6. 2nd job or part-time
Is it mandatory to file tax return in Germany?

For some groups in Germany, filing a tax return is mandatory. These are self-employed and freelancers. It is also mandatory for you, if you are an employee and are in tax class 3, 4, or 5, you have divorced and remarried in the same year, additional income or salary replacement income over 450€, more than one employer in the same year, or with more than two salaries. For the other areas it is not obligatory, but can be useful, since 9 out of 10 people get on average 1.072€ back in taxes.

How is income tax calculated in Germany?

In Germany, no tax burden applies up to an annual income of €10.347 (in 2022). This is called the zero zone. After that, the lower progression zone begins, starting at 10.348€ and ending at 14.926€. The tax burden is 14% – 24%. The middle progression zone runs from 14.927€ to 58.827€ with a tax burden of 24% to 42%. The upper progression zone, with a tax burden of 42%, runs from 58.828€ to 277.826€. Then the proportional zone starts from 277.827€ with an annual tax burden of 45%.

How are tax deductions determined?

When you deduct something for tax purposes in Germany, you will get your personal tax rate back by filing a tax declaration. In concrete terms, this means that you do not get back the total amount of your expenditure, but only a part. For example, if you have a personal tax rate of 42%, you will get back this percentage of your expenses. This means, if you spend 100€, you will get 42€ in tax refunds, provided you file a tax return. Thus, you should not spend your money unnecessarily just because you can deduct something from your taxes.

Get In Touch With Us

Would you like to learn more about tax-saving investments in Germany or do you need help in choosing the right investment options? Just send us a message and we try to help you with your questions about taxes in Germany.