Working in Germany
In Germany there are 6 filing status for the deduction of income tax on wages (wage tax). These filing status only apply to employees. The filing status determines how high the monthly wage tax deduction is, which is withheld from your wages and paid to the Tax Office by the employer. The income tax deduction serves as an advance payment on the annual income tax. The wage tax deduction should match the amount of income tax for the year as precisely as possible so that there are fewer additional payment obligations or reimbursements. This is achieved by classifying employees into filing status. The filing status reflect different constellations of marital status and marital or civil partnership income distributions.
In Germany there are 6 filing status for income tax on wages (wage tax). The filing status depends in particular on your marital status and, if you are married or in a registered partnership, on the distribution of the two incomes. In some cases you can choose between different filing status. A filing status fits best when it reflects your personal situation (marital status and income distribution) most accurately. An overview:
Filing status I ...
... applies to single people, i.e. unmarried, separated, divorced or widowed employees.
Filing status II ...
... applies to single people with at least one child in the household. By choosing Filing status II, you will receive a tax credit of €1,908 per year (plus €240 for each additional child as part of the tax exemption procedure). You will only receive filing status II if you meet the legal requirements and submit an application.
Filing status III ...
... only employees who are not permanently separated, subject to unlimited income tax liability, married or living in a registered partnership may elect this option. This filing status is worthwhile for you if your spouse or life partner is not employed or earns significantly less. If you opt for filing status III and your spouse or partner is also an employee, he or she will be classified in filing status V.
Filing status IV ...
... is the standard model for employees who are married or living in a registered partnership. If both spouses or life partners earn about the same amount, this filing status combination is suitable.
Filing status V ...
... is the counterpart to filing status III. Employees whose spouses or life partners are in filing status III are divided into this filing status.
Filing status VI ...
... applies to employees who have several jobs at the same time and receive wages from several employers. The salary from your main employment is taxed according to the filing status I to V that suits you, the salary from another employment is taxed according to filing status VI.
If you are self-employed or run a business or an agricultural or forestry business, no tax is automatically withheld from your income. The tax is calculated retrospectively on the basis of the submitted tax return for the entire year. You are obliged to submit a tax return once you exceed certain income limits. In order to avoid a high additional tax claim, advance payments corresponding to the amount of the expected annual tax should be made to the Tax Office during the year.
If you no longer have the documents for a tax identification number that has already been issued, you can contact the Federal Central Tax Office. This also applies if you were given the tax identification number during a previous stay in Germany, because it remains valid for life.
You can arrange for your tax identification number to be sent again on the website of the Federal Central Tax Office . You can also call 0049 228 406 1240 Monday to Friday from 08:00 to 16:00 or write to inquire. If you have any questions, please specify your surname, first name, full address, date of birth and place of birth.
If you are not registered in Germany but still pay taxes here, your tax identification number will be assigned to you as part of the processing of your income tax return. You will be given the identification number in writing a short time later.
Cross-border commuters are employed people who live in Germany and commute to work in neighbouring countries every day.
Taxation of cross-border commuters
In order to avoid an excessive tax burden for cross-border commuters, there are national regulations and so-called double taxation agreements (DTA) between the neighbouring countries. Germany has even concluded very special agreements with France, Austria and Switzerland to avoid double taxation. You can find the double taxation agreement on the website of the Federal Ministry of Finance.
If you have no place of residence or habitual abode in Germany and are only here for up to 6 months, e.g. as a seasonal worker or as part of a posting, you are generally subject to limited tax liability with the income generated. This means that in Germany you only have to pay taxes on certain income that you earn in Germany. This includes income from employed work, such as your wages for work that is carried out or used in Germany. If you work for a domestic employer who has its management in Germany, for example, or for a foreign lender, your employer withholds the wage tax payable from your wages and pays it to the tax office. The tax is then deemed to have been paid. If wages are your only source of income, you usually do not need to file a tax return. As a citizen of an EU country, Iceland, Lichtenstein or Norway residing in one of these countries, you also have the option of applying for income tax assessment. To do this, you must submit a personally signed income tax return. This makes sense, for example, if you want to claim deductions or if German taxation law is restricted by an agreement to avoid double taxation (DTA), which means that your wages in Germany may not be taxed at all or only to a limited extent. You can find out whether Germany has concluded a DTA with your country of residence on the website of the Federal Ministry of Finance. The current status of double taxation agreements and other agreements in the tax area is published here. You can also find out more about the tax treatment of wages under the double taxation agreement on the following website.
From the time you give up your place of residence or habitual abode, you are only liable for tax in Germany on your income generated within Germany. This includes, for example, wages for an activity carried out in Germany and income from the rental of real estate located in Germany. If you are obliged to file a tax return or do so voluntarily, this income must also be declared.
You probably need part of your income for work-related expenses or for provident expenses or certain other obligations. These parts of your income are not at your free disposal and should therefore not be taxed. Therefore, certain expenses can be deducted when calculating the tax. This reduces the taxable income and the tax burden. The most important deduction amounts are:
- Income-related expenses: These are expenses that arise in close connection with professional activity. This includes, for example, advertising expenses, costs for work and official clothing, costs for work equipment (e.g. tools, specialist literature, office supplies), union dues, expenses for travel between the place of work (first place of work) and home in the form of the distance allowance or actually higher costs for public transport, costs of keeping two households.
Tip: For each employee, income-related expenses of €1,000 per year are automatically taken into account. If your income-related expenses do not exceed this amount, you do not have to itemise and document them individually. In the event that your expenses were higher than €1,000 per year, for example if you need a second professional home because your place of residence and work are different (so-called double household management), you can claim this in a tax return.
- Special expenses: These are, for example, pension expenses (insurance contributions with a pension character), expenses for additional old-age provision and donations.
- Allowances for persons with child/children: Tax-free child allowance and allowance for the care and upbringing or training needs of the child.
- Exceptional costs: These are expenses that exceed the usual level and which the taxpayer inevitably incurs, i.e. which cannot be avoided. For example, particularly high medical expenses or expenses of the taxpayer for the maintenance and vocational training of another person entitled to maintenance.
You will receive the 11-digit tax identification number in a letter from the Federal Central Tax Office. You can also find the tax ID on your wage tax statement or the most recent income tax assessment. You submit the application for an income tax return to the Tax Office responsible for you in the following year.
If you have any questions about the tax identification number, you can call the Federal Central Tax Office (Tel. +49 228 406-1240, Mon-Fri from 8:00-16:00).
The use of a uniform identifier for tax purposes is widespread in the Member States of the EU and also corresponds to the recommendations of the OECD for the Taxpayer Identification Number (TIN).
In the international exchange of information in tax matters, the Tax ID no brings about a significant improvement in administrative execution. In principle, it is possible to identify people without using a TIN, but this involves considerable additional effort, since names, addresses, and the date and place of birth have to be transmitted.
The employer has to pay wages from marginal part-time employment in accordance with § 8 para. 1 no. 1 of the 4th Social Code SGB (IV) (Mini-Job or so-called 520-Euro-Job) and only then does not create an electronic wage tax certificate if it has levied the wage tax as a lump sum.
Employers are generally obliged to send their employees’ income tax statements electronically to the tax authorities. The employer must give the employee a printout of the wage tax certificate based on the official model or provide it electronically.
You will receive the income tax certificate at the end of the year. The employer usually sends the income tax certificate to the employee together with the first payslip in January or February of the following year. If you have not received the wage tax statement, request the statement from your employer. By means of the electronic transmission of the employer, the tax authority has access to all information about the income situation of an employee. This includes gross wages, withheld income tax, solidarity surcharge, any church tax withheld and social security contributions.
You should keep the printout of the electronic income tax statement until you retire, because the notifications can then be needed to calculate the pension – or to contest the calculation of the pension entitlement.
You need the income tax certificate for your income tax return and possibly as proof for the tax authorities, family benefits offices or other authorities. You should keep the printout of the electronic wage tax statement until you retire, because the notifications can then be important for calculating the pension.