This provides an overview of German taxes.
Taxes in Germany are higher than in Britain and America: expect to take home around 50% on a professional-level income (after deductions for pension and health insurance). Given the relatively low cost - and high standard - of living, this should not be seen as an impediment to moving to Germany.
Types of German tax:
- MEHRWERTSTEUER - the tax added to the price of goods and services. Known in the UK as VAT (Value Added Tax) and in the US as Sales Tax. Unlike the USA, the Mehrwertsteuer is already included in the posted prices at stores. This increased from 16% to 19% in January 2007.
- EINKOMMENSTEUER - the regular income tax. Too complex to even BEGIN to explain it here...just be aware that it is much higher than in the UK or the USA. So if your company is sending you over, make sure they apply Hypo-Tax calculations.
- SOLIDARITAETSZUSCHLAG - Solidarity tax (originally introduced to help rebuild east Germany after the reunification - but only people in west Germany paid it!). Is a part of the Einkommensteuer. Was supposed to be cancelled, it's still around - the money came in handy to the government. Now with Merkel, an East German, in power, what are the odds of its getting reduced? :-(
- KIRCHENSTEUER - Church tax - if you belong to one of the main religions, "donating" is not an option. Take 8% of your income tax due in a year, and it is ON TOP. Only consolation is that you can deduct it from your gross income in your income tax statement (Einkommensteuer). If you declared your religion when you arrived (when you went to register and get your Lohnsteuerkarte), then you have to pay. Given the, say, negative experiences some religions have had in the past in Germany, why would anyone declare their faith? Still, you can formally leave the church (austreten) - over 800 Germans do it every day. See: kirchenaustritt.de.
- RUNDFUNKGEBUEHREN - TV Tax: if you have a TV or radio in your house, you have to pay for a license for it. You can get the forms at the post office (GEZ) so the tax can be deducted automatically from your bank account. A whopping €17.03 per month!
- FAHRZEUGSTEUER - Automobile tax. It is a function of the displacement (cc's) of your engine, and the emission rating of the car. Here you can calculate how much it is: Vehicle tax calculator.
As well as taxes, don't forget that there are various compulsory insurances to be paid. See: German insurances
See also:
External links: