German tax for full-time employees in Germany

Hi

Having read on the board about German tax it appears that it is far higher than the UK.

Someone has contacted a friend of mine about a potential job offer in the Dusseldorf area.

The job is paying 55,000 to 60,000 EUR per annum. This would be permanent, a German contract not an English one. and hence liable to German Tax.

The questions I have are:
The person is a 40 year old single person (UK citizen, I assume would become German resident)

How much tax would a 40 year old single person have to pay?
What sort of Tax, Geramn national tax? - State tax? Ni tax?
Is there even a German equivalant of the dreaded council tax?

Also when does the German tax year run from?

This person also has a UK mortgage and would also have to pay for accommodation in Dusseldorf.
Rent for a 1 bed flat in DD has been quoted as about 500 EUR per month?- Is that accurate?
How much is a flight between DD and LHR leaving DD on a Friday night and returning Sun night/Mon morning?

The answers to these will determine on how to proceed..

Thanks in advance for answers to the questions.

Frances

Come on francesd, come clean -- this "friend" is you, right?

About half of CT goes on schools and education, considered worthwhile here, not something to "dread" or resent. That (plus social care which is the other big part) comes out of your income tax here. You pay local taxes for street cleaning etc as part of your housing bills here (probably a few hundred a year).

No such thing as NI (unsurprisingly given that we are not the UK). You will pay 7,5% of your salary on healthcare insurance - no state provided healthcare so forget "free at point of service" and all that. That'll probably be twice your old CT bill. You also pay specifically for unemployment insurance (c. 6,5%) and for pension (c.10 %).

That's all on top on income tax: 7,5k is 0%, the next block c.40k is 15%, and then 42% (ie. that'll be the marginal at the 60k you refer to). There's also some other ones. Solidarity tax, care tax and the like.

Some of your questions are answered specifically in past threads here, so suggest some searching. The likes of opodo.co.uk can tell you flight prices.

That's all on top on income tax: 7,5k is 0%, the next block c.40k is 15%, and then 42% (ie. that'll be the marginal at the 60k you refer to). There's also some other ones. Solidarity tax, care tax and the like.

on 60 K
I take it this would be (7.5 *0) + (40k*0.15) + (12.5*0.42) = 6000 +5250 = 11250 (income tax)

Local tax - approx 1000 (eq to council tax)

Church tax (not religious - so would this be NIL)

Care tax??

Unemployment tax - Is this mandatory for non-citizens (if you lose your job, its the first plane home)

East German (solidarity tax) - do non Germans have to pay this? - If so what percentage is this?

Health Insurance - 4500 (seems a bit high)

Pension - 6000 (that is a must)

Is there anything else

Thanks everyone for answers in advance

Also - Do a married couple where both parties are working get taxed as 2 single people, or do they get all the TAX perks that a married man with a wife at home enjoy?

Frances

On top of that there would also be the council tax and NI to pay at home in the UK.
Council tax at 50% (if property is unoccupied)
and NI to keep up pensions.
It could all add up?

Most of these questions can be answered with some determined searching.

Regarding health you could contact some of the health insurance pros on this board. At that rate of pay you may be able to opt out of public health insurance, but I don't know for sure because I've never had to think about it. Kind of like me thinking about when I'll run out of oxygen if I fly too high.

You can opt out of church tax when you register in your town.

I read on wiki under german taxes
'In addition to regular tax, there is a municipal trade tax of 14%-17% that is imposed by the municipality'

Is this the landes tax (e.g NWR) or the city tax - similar to council tax (e.g Dusseldorf) ?

Thanks

http://www.ailo.org/downloads/Germany.pdf

Found this probably answers most of my questions

Yes, non-Germans have to pay this tax, even if they live in Ossiland (and Ossis pay it too, apparently in solidarity with themselves)

maybe try googling einkommensteuer deutschland 2009.

solidarity tax is 5%. if he has expenses, then there are various deductions he can take. filing as a married couple brings a definite tax advantage. but on average he could be looking at handing over 48% of his salary. but i'm not 100% sure. but it is possible to get some of this back. you should maybe try to consult a tax advisor in germany. since i am not one.

in terms of flights. the person would probably need to look at lufthansa or one of the budget airlines. not sure which ones serve düsseldorf though

Place of residence determines where income tax is due.

Calendar year.

Whilst a UK mortgage reduces taxation when liable for tax in UK, a UK mortgage is IMHO irrelevant for those liable to taxation in Germany.

It is very difficult to tell you exact numbers, if you just want rough numbers, you will be taking home something between 52% and 55% of you income. If you are going to keep your home in UK you can later try to deduct some things in your tax declaration under the second home rules, but you are the owner of the house so I do not know how that really works.

Council tax at 50% (if property is unoccupied)

If you are flying home every weekend it isn't unoccupied. You should be able to get a two homes allowance saving a bit on your German tax bill.
Most transferees find it possible to move out of their home and rent it to a tenant to cover their mortgage payments. Then the tenant pays the council tax. Otherwise maintaining two homes is expensive. Search around for other threads here which deal letting a property in UK if it is an option for you.

Yes, a married person can claim an allowance for their non-working spouse. If both work they have a choice how they share the allowances.

a 40 year old single male might indeed be much better served with private health insurance. In order to be eligible to opt out form public health insurance, the following requirements need to be fullfilled:
a) current (new) salary must be over the threshold (around 48k EUR gross salary/year)
and during past and consecutive three years gross salary anywhere in the world has also to have been over the relevant thresholds (somewhere between 47-48k EUR/year)
Make sure that you make this an issue right away when discussing the contract. I have had several cases lately where in blatant unknowing of the ramifications of the (new) laws German employers did not inform their new employees about their rights to opt out (it is actually the liability of the employer to do so and to check this out for and with the employee) and signed them on with public health insurance which made then getting them out much, much more complicated.

You can save probably around 100-150 EUR/month net income just by going with private health insurance in your case... and receive even better coverage at that. Also there are a number of tax saving pension plan options one should contemplate when staying for a couple of years as an employee in Germany. Get the help/service of an independent advisor to find the best solutions for you...

Cheerio

... it's 5.5%. Of the income tax you pay after all deductibles, not of your income.
That's a corporate tax (Gewerbesteuer), not for private tax calculations.

Is that based on the assumption that he won't get married and have children at that point, at least while he's in Germany?

Yes, that was/is the assumption. I thought I read that the person wanted to remain only three years in Germany tops, which also was factored into my assessment for the reply, now I see that this was another person/thread entirely. And from a PM I have learned that the person is actually female...

But I think I have written it often enough here on Toytown in the WIKI and many threads that the decision if someone - if he/she is eligible for private insurance at all to begin with - goes with private health insurance is indeed to be based also on the plans for the future regarding marriage and children in relation to how long one plans to stay in Germany. Thus hopefully this part is understood by now... somehow... a little bit... please...

Cheerio