Chesterfield (London) - Headquarters
207 Old Marylebone Road
London
NW1 5QP
Tel: +44 (0) 203 771 3853
Fax: +44 (0) 203 771 3856
Email: sales@groupchesterfield.com

German Income Tax

Before accepting a foreign contract, a contractor needs to consider carefully the taxation and other requirements of the country they are going to. At Chesterfield Management, our International Umbrella Services can help you deal with these requirements and discuss with you the options you may have.

Should you work in Germany for 183 days you may be considered resident in Germany for tax purposes from the date of your arrival. For some contractors, for example, those leaving the UK, if you choose to work through your UK limited company, Germany is even more stringent than the UK’s IR35.

At Chesterfield Management, we are experienced at dealing with agencies and the paperwork they require.

German Income Tax Rates

Taxable Income Band € National Income Tax Rates
0 – 8,004 0%
8,005 – 52,881 14%
52,882 – 250,730 42%
250,731 + 45%

The income tax rates are progressive and the table above is based on the rates that applied for 2012 declared on the 2012 Tax returns. Tax allowances are available to all tax payers and depend on your personal circumstances and deductions are allowed for certain types of expenditure. The rates above do not include social security or communal taxes.

In Germany municipal taxes are payable and these can increase the amount of tax payable by up to 9 %. 

A 5.5% solidarity surcharge is imposed on the income tax liability of all taxpayers.

If a German tax resident is a member of a church entitled to impose church tax, church tax is assessed at a rate of 8% or 9% on income tax liability, depending on the location.

German residents are also entitled to tax allowances based on their personal circumstances and tax relief on certain personal and business expenses. Here are the main allowances and reliefs;

Married allowance

There are significant allowances in Germany for married persons with only one income. A taxpayer who is an EEA national and whose spouse lives in another EEA country may also benefit from these allowances if the couple’s worldwide income not subject to German tax is less than EUR 16’008 per annum. In most cases this means that the spouse’s income should be less than EUR 16’008.

Single persons allowance

Resident single taxpayers may claim a basic allowance of EUR 8’004.

Children's allowances and deductions

For every dependant child of the taxpayer, the following deductions apply:
a. A child deduction of EUR 2’184 (double for jointly-assessed spouses)
b. A childcare deduction of EUR 1’320 (double for jointly-assessed spouses)
c. A single-parent taxpayer may claim an additional deduction of EUR 1’308 per year if at least one child lives in his household.

Alimony

Alimony payments are tax-deductible up to EUR 13’805 for a resident spouse if the spouse agrees to be subject to tax on those payments.

Education

Expenses for a taxpayer’s first professional or higher education are tax-deductible up to EUR 6’000 per year.

Insurance

Mandatory contributions to health, accident, unemployment and liability insurances may be deducted up to a maximum deduction of EUR 2’800.

The tax year is the calendar year and runs from 1st of January to 31st of December. The annual tax return dead line is 31th of May for the previous tax year. 

At Chesterfield Management we can discuss with you the options and available solutions where you can reduce your tax bill in Belgium.

To learn more contact us on our office telephone number 0044 (0)2070971385, request a call-back, or click here to email us


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