Expatriate tax ebook - Germany

Facts and figures

Pre arrival procedures
Employment visas
Tax year
Tax returns and compliance
Income tax rates
Sample income tax calculation

Pre arrival procedures
Non EU nationals usually need to apply for a visa at the German Embassy or Consulate in their home country before travelling to Germany. The documents required can often be found on the homepages of the German Embassy or Consulate websites.

EU nationals do not need a visa, however, there are transitions rules for the new EU members since 1 May 2004.

Employment visas
Having arrived in Germany, non EU nationals are required to apply for a work permit at the aliens department of the local municipality. Grant Thornton Germany can help with these legal formalities.

EU nationals do not usually need a work permit.

Tax year
The German tax year runs from 1 January to 31 December.

Tax returns and compliance
The deadline for tax returns is 31 May, however, this deadline can be extended. Tax returns prepared by professional tax advisors are automatically extended to 31 December.

Income tax rates - 2008
Generally there is a basic tax free amount of € 7,664. For higher incomes there is a proportionally progressive tax rate. There is a special tax rate for married persons with joint assessment.

Basic tax free amount	€
Basic tax table for unmarried persons Splitting table for married people	7,664 15,329 *
First bracket rate of	15%
Top rate	45%**
From a taxable income of Basic tax table for unmarried persons Splitting table for married people	€ 250,001 500,001

* Additionally a surcharge of 5.5 percent of income tax is levied
** as from 2007 because of the new “introduce tax for rich people”

Sample income tax calculation 2008/09
The employee is not married and has no children. Earnings of dependent employment and capital gains. Further the employee uses a company car, which he can also use for private drives.

Employment income:	€
Salary Car benefit (1% list price of car)	100,000.00 6,000.00
Total earned income	106,000.00
Less
Blanket deduction for income-related expenses	920.00
Net taxable salary	105,080.00
Incomes of dividends (Half)	10,000.00
Less
Savers’ tax –free amount	750.00
Blanket deduction for income-related expenses	51.00
Total incomes of dividends	9,199.00
Adjusted gross income = Net taxable income	114,279.00
Income tax thereon:
Income tax Solidarity surcharge	40,083.00 2,204.56
Total	42.287.56
Residual liability € 42,287.56

Information about Germany:

• introduction
• facts and figures
• basis of taxation
• what taxes?
• tax planning opportunities