Tax in Germany - help!

We should be relocating to Germany next summer & are trying to establish that we can afford to! Is there a handy website that will allow me to calculate what our full tax burden would be in Germany?
How does the cost of living in Germany differ to that in the UK?
Thanks for your help!

not even the germans understand the german tax systme
houses and flats either to rent or buy are cheaper than the uk.
cars are also cheaper than the uk.
when you say we are moveng to germany i presume you are maried, if so you can choose what tax bracket
each of you take ie the partner that earns more pays less the partner that earns less pays more and the joint acount is a little bit healthier.
when i first moved here a friend helped me sort out my tax returns and i got a nice chunk back for moveng expenses. sorry i cant be more help.
there used to be a guy on the board that did finantial advie but i cant remember his name sorry.
beer and cigies cheaper
petrol about the same
groceries a little bit cheaper but not much
eating out more expensive (real food) mc donalds is cheaper.
good luck

ive just had a scrach about and found the guy i was thinking of.

mike woodiwiss
tel 02432 80365
email mjwoodiwiss@aol.com

i dont know anythingabout mr woodiwiss other than he ofers finantial advice but ime sure he could help you more than me.
good luck

I think the rule of thumb is that you can expect to pay somewhere around 40% of salary in taxes - but that is very general! If you're self-employed then you can set loads of things off against tax and probably get closer to the 25% mark.
My advice is don't let the money be the only deciding factor. The quality of life is far better over here and you won't get your car keyed. Well, actually you might, but it's pretty unlikely.

Jean-Pierre

Eating out is a whole lot cheaper for me here (Frankfurt) compared to most UK cities Ive been in - at least for a nice Italian restaurant

oh yeh and dont forget that as well as income tax you have to pay for medical insurance and a state pension
and its all done as percetages of youre bruto earnings , (the more you earn the more you pay) as a single bloke unfairly clased as haveng no dependants the b@+~&³ds take around fifty percent from me alltogether.

but dont let that put you off
as jp says the quality of life here is better

Is it fcuk!

It depends on what the individual makes of it !
For some it might be better, but for others it just might be worse.
Some people just don't have a choice other than to stay here

Verena,depends if you are going to be Self-employed.
Jean-pierre mentioned the tax you can right off if you are self employed.
Problem is apart from the usual Income tax and VAT as a self employed person you also have pay,

Vorsteuer - a kind of pre tax,ie you have to pay next years VAT taxes in advance (mad I know) very difficult to pay something you havn´t earnt yet.

Gewerber steuer- ( a kind of industrial tax-not sure what its for)

IHK- which is some kind of pathetic union that you will never need but have to "by law" pay your dues anyway- at least they send you a Quarterly mag with some graphs and charts in German.

The tax system for self-employed is short sighted draconian to say the
least.
If you are on the "system" though then expect at least 50% to disapear.
Dont bank on seeing any of the money back that you pay into the pension scheme though.
When all is said and done you get what you pay for and the standard of living is high.

Just wish that the government (UK included) could be told that they are "In power to serve the people" and not the" People to serve the governement"

Check out these links

cost of living in Munich

Munich salaries vs. cost of living, What salary required to live well? Options

Generally speaking a single person will lose about half your paycheque to taxes, a person with dependants will pay around around 30%. It gets a bit funny when you get two paycheques, but generally speaking that is about right.

bad day farlands?
i think i can geuss where the problems are comeng from but that belongs in another thred.

I'm pretty sure at least some of this is incorrect. I'm pretty sure I don't pay IHK - whatever that is. Not sure about Gewerbesteuer. But Vorsteuer is not really tax for stuff you haven't earnt. You pay up front what you would normally have to pay at the end of the year, but you only pay it after you've earnt it. Every month I say how much I earnt and then pay the VAT on that - but I get the VAT from the company who employs me in the first place! I don't pay on stuff I haven't earnt. And as for paying Einkommsteuer in advance, well I do that, but again it's only "in advance" in terms of paying it when you earn it rather than at the end of the year. Just to put things in perspective, I get keep about 80% of my gross earnings and then pay about €5000 per year for health insurance for me and the dustbins.

Jean-Pierre

Here's a handy website with a list of how much tax you would pay albeit for 2003.
http://www.german-embassy.org.uk/Uk-German_Tax.pdf

I am not sure what percentage I pay as I am self-employed & my German accountant sorts it all out.
But I pay tax every 3 months but that is not that much different to the PAYE system in the UK where you pay tax monthly. I believe both are based on your estimated income for the year. If I have paid too much last year then I will get a rebate in the next months (or receive a 'friendly' bill from the Finanzamt for paying too little), after my accountant has filed the tax return.

But this thread is similar to:
Moving Sale: Appliances and Furniture

As J-P wrote: "some" of this is incorrect, in fact it is pretty well completely incorrect. Perhaps Black S2 should have asked the questions Verena asked...

Vorsteuer is what you pay-out in VAT on your costs. Basically, it is all the VAT you spend on petrol, office equipment, services etc. You subtract this from the VAT you charge and pay the difference to the Finanzamt, so it is effectively income. You can choose to have 1 month longer to do your VAT returns, in which case you have to pay 1/11th of your last years's total in advance. If you don't have a last year, you don't have to pay any, you can do a return after the first year, although if you have high costs, it may be better to do returns volontarily.

Generally as self-employed, you do not have to pay in advance. Employees have to do an equivalent to PAYE and submit tax returns by March of the following year, self-employed have a further year (I am currently preparing my return for 2004) if they work through an accountant. If you don't have an accountant, you will have the Finanzamt all over you, threatening all sorts. Any income tax pre-payments you have to make are assessed from your last return and are payable quarterly, if you cannot be sure of any income, you can have the pre-payments annulled and pay your dues after submitting a yearly return.

Gewerbesteuer is payable if you have a Gewerbeschein. The Gewerbeschein is only necessary for "trading", if you are consulting, you don't need this, and don't have to pay Gewerbesteuer. There is a list of professions which are allowed to be self-employed without a Gewerbeschein, such as doctors engineers, architects, translators, ect.. The tax office will tend to tell you you need a Gewerbeschein, even if you don't.

IHK is not a necessity, but is a requirement if you start a GmbH or many forms of Gewerbe. Depending on your trade and type of business you may have to become part of a "Berufsgenossenschaft", which is like a guild.

German tax law is not draconian, if you go about it the right way. It offers free-lancers a lot more possibilities than the British system does, you just have to work it properly and you absolutely need a good accountant. Even the people in the tax offices here do not completely understand tax law, so they will demand things they are not really entitled to, and a good accountant will get you things the tax office don't want you to have.

A lot of ex-pats seem to have the problem of expecting things to work here like in Britain, just with more money and beer. Of course it doesn't work like that so, if you are prepared to adapt and accept the way the system works here, you can have a lot of advantages. You just have to do the ground work properly. If you don't you will fall flat, and a lot more heavily than you will in Britain.

Don't get into Black's situation of paying things you are not sure what they are for, you may not have to pay them at all, so always find out from a professional what you have to pay and what not. It is very easy to end up paying things you don't need to here. It is just as easy, and even more expensive, to not to pay something you have to.

The be all is always to take advantage of good professional advice (get a recommendation, as there are a lot of incompetents around), as the actual requirements and possibilities will depend very much on your own personal circumstances and german tax law is very, very complicated.

Mike,I refused to pay the IHK a couple of times after I found out that I may not need to pay them.I even went to their office in Frankfurt.
I ended up getting a few Mahnungs with a threat to freez my account so I just paid up becuase I was "zu kasse gebeten".

You are right though it would appear I have been mis-informed as far as Vorsteuer etc,I definately need to change my "steuerberater"!
Just got so used to tax bill after tax bill coming through the door I paid up out of blind fear!
Its all abit academic for me now though as I am out of here in 2 weeks