concerned, but it is possible to get an extension. For more information, consult the tax office website at www.finanzamt.de As in many other countries, Germany allows a variety of deductions which can lower taxable income. Deductions are granted for children under 18 (or under 25 if still attending school), specified insurance premiums, charitable and political contributions to German entities (up to certain limits), and unavoidable extraordinary expenses (such as illness). If you think you are entitled to get some money back, and most taxpayers are, you should seek professional advice from an income tax association (Lohnsteuerverein) or a tax consultant (Steuerberater). They will either charge you a flat fee or a fee based on your total income – but this can be deducted in the next year as an expense.
not have children. If you reside in Germany for less than five years, you might be able to get a refund on the employee portion (not the employer’s contribution) of the retirement insurance only. This does not apply for your employee contributions to both unemployment or the nursing care insurance.
Solidarity Surcharge The enormous job of merging the two Germanys was in part financed by this tax, which is a surcharge of 5.5 percent of the normal income tax paid. Even though unification was over 20 years ago, this tax remains the lasting legacy. The tax is levied on all corporations and individuals.
Other Taxes In addition to income tax, there is also a series of sales taxes that significantly impact both individuals and businesses. The major tax is the Mehrwertsteuer (value added tax), which is levied on each step in the production and delivery of most goods and services. The current VAT rate is 19%, while the reduced rate of 7% applies to only a few goods such as food items and books. There are also specific taxes on certain goods such as gasoline, alcoholic beverages, tobacco products, tea and coffee.
Retirement, Unemployment, Health Insurance and Nursing Care Insurance In addition to income tax, you will be liable for a wide array of social contributions, primarily for retirement, unemployment, health insurance and long-term nursing care. Payments for these programs are normally borne equally by the employer and the employee. The biggest chunk of the total social contributions pays for your retirement insurance (Rentenversicherung), which represents 19.5 percent of your monthly income. Unemployment insurance (Arbeitslosengeld) amounts to 6.5 percent of your gross revenue, while the long-term care insurance (Pflegeversicherung) represents 1.7 percent or 1.95 percent for taxpayers who do
Church Tax If you are member of either the Catholic or Protestant church, you will also be liable for tax equal to 8-9 percent of your income tax. You can opt out of this tax by simply checking “none� (keine) when you register with the Tax Office. However, not being a taxpaying church member does have it consequences. Most churches will deny you baptisms, church weddings or funerals if you’re not a tax-paying member of that religion.
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Banking in Germany Having a bank account is essential to your existence in Germany. You cannot pay the rent without one, nor get paid by your employer. So one of the first things you need to do when you begin your new life here is to go down to the local bank and open an account. What follows is a brief primer on the German consumer banking system. Giro Account: The most common and
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