Ministry of Labour, Social, Family Affairs and Integration
Bank Account, Insurance & Taxes Taxes
In Germany there are different types of taxes. We explain the most important tax types:
Hamburg Welcome Portal – Living - Bank Account, Insurance & Taxes – Taxes
- In Germany you have to pay taxes on your income.
- Everyone’s income is subject to a basic tax allowance. Up to this amount, your income is not subject to tax. The basic tax allowance for the year 2017 is 8,820 Euro for single persons and 17,640 Euro for married persons.
- The taxation rates vary from 14% to 45% from your income. The rule is: the higher your taxable income, the higher the rate of taxation.
- As an employee, your employer will automatically deduct the income tax from your wage and transfer it to the tax office.
- Self-employed persons have to pay their income tax themselves and are obliged to annually submit an income tax declaration.
- Anyone who belongs to a church or a religious community that charges church taxes must pay church tax. In Germany these are above all the two big churches, the Roman Catholic and the Protestant Church.
- Church tax is a tax additional to income tax and is forwarded by the tax office.
- The taxation rates vary from 8% to 9%, depending on the state. In Hamburg the taxation rate is 9%.
Capital Gains Tax
- Capital gains tax is a tax on capital income (interest on call money, fixed interest or on the scarce stock, as well as on dividends, etc.).
- For capital gains, there is a savings allowance (Sparer-Pauschbetrag). Up to this amount, your capital gain is not subject to tax. The savings allowance (Sparer-Pauschbetrag) for the year 2017 is 801 Euro for single persons and 1,602 Euro for married persons.
- The amount of the capital gains tax is generally 25%.
- Capital gains tax is normally withheld by the paying credit institution.
Value Added Tax (Sales Tax)
- Consumers are in contact with value added tax in all transactions of daily life.
- It is generally 19%; but for certain products such as food and books, a reduced tax rate of only 7% applies.
- The tax is already included in the prices charged in supermarkets, shops and restaurants etc.
- All businesses that operate in Germany are liable to trade tax.
- The tax is levied on business profits.
- Freelance work (for example as an actor) is not subject to trade tax.
- For further information, please contact a tax consultant or the tax office, which is responsible for your district. To find the responsible tax office, please enter your registered address in the authority finder (Behördenfinder).