Expatriate tax - Germany

Non-European Union (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 usually need a visa.

Having arrived in Germany, non-EU nationals are required to apply for a work permit at the alien’s department of the local municipality. Grant Thornton Germany and their service partner can help with these legal formalities.

EU nationals do usually not need a work permit.

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

The deadline for tax returns is 31 July, however, this deadline can be extended. Tax returns prepared by professional tax advisors, certified auditors or lawyers are automatically extended to the last day of February after the next following the tax year, e.g. for 2024 the filing deadline would be 28 February 2026.

Due to the COVID pandemic the 2024 tax return deadline for tax returns prepared by professional tax advisors has been extended to 30 April 2026.

Generally, there is a basic tax-free amount of € 11,784 (€ 12,096 for 2025). For higher incomes there is a proportionally progressive tax rate. There is a special tax rate for married persons with a joint assessment.

Basic tax free amount                                         2024                              2025
Basic tax table for unmarried persons                €11,784                        €12,096
Splitting table for married people                       €23,568                       €24,192
First bracket rate                                                    14%*                            14%*
Top rate                                                                    45%*                           45%*
From a taxable income of           
Basic tax table for unmarried persons                €277,826                      €277,826
Splitting table for married people                       €555,652                     €555,652

*Additionally, solidarity surcharge of 5.5% of income tax amount and church tax (if applicable) is levied.

The solidary surcharge will only be applicable in case the income tax exceeds € 18,130 EUR (€ 19,950 in 2025)

Sample income tax calculation (for a single taxpayer)

Employment income                                                                             2024 (€)
                                                                                                                    
Salary                                                                                                     100,000
Car benefit (1% gross list price of car)                                              6,000
Total earned income                                                                             106,000
Less     
Lump sum deduction for income-related expenses                          1,230
Adjusted gross income = Net taxable income                                   104,770
Income tax thereon:     
Income tax                                                                                              33,367
Solidarity surcharge                                                                             1,813,
Total                                                                                                         35,180
Residual liability                                                                                  35,180

German resident individuals are liable to income tax, gift tax, inheritance tax, sales tax and, in certain instances, church tax. An individual is resident for tax purposes if he or she maintains a domicile or habitual place of abode in Germany.

Domicile

A domicile is a place where the individual maintains a residence under circumstances, which indicate that he will keep and use it on a more than temporary basis.

Habitual place of abode

The habitual place of abode of an individual will be established if the person is physically present on a long-term basis in Germany. Persons are resident in any case in Germany if they stay longer than six months in Germany, where short interruptions of the presence in Germany will not be taken into account. If the employee has his domicile or habitual place of abode in Germany, then he is fully taxable in Germany. German resident taxpayers are subject to tax on their worldwide income. Double taxation will be avoided in accordance with the applicable double tax treaties.

Individual non-resident taxpayers are subject to tax in Germany on their German sourced income. Non-residents can apply to be treated as a resident if their German income is at least 90% of their total worldwide income or when the worldwide income, which is not subject to taxation in Germany, is less than €9,408 (€9,744 in 2021) (adjustments for foreign tax basis calculations are necessary for several countries). For spouses of residents living in the EU/EEA it is also possible to claim a classification as resident if the joint income contains income which arises almost entirely in Germany.

Salary consists of money and non-monetary remuneration. Most non-monetary remunerations are taxable in Germany. Individual taxpayers are allowed to claim all expenses directly incurred with their incomes from employment. There is a lump sum for employment expenses at an amount of €1,230. Thereafter, various other deductions and allowances apply on taxable income from employment.

Remuneration for any work performed in Germany, regardless of who pays it and where or when it is paid, is taxable. In this regard the regulation of the double taxation agreements between Germany and other countries applies accordingly and can restrict German taxation rights.

Most non-monetary remunerations are taxable in Germany (e.g. a company car).

The German income tax law does not provide for special deductions or tax-free expatriate premiums. However, lump sums for moving expenses are granted. In addition, tax free per diems can be granted for business trips. Double housing costs can be claimed up to certain amounts, if certain criteria are fulfilled.

Double taxation will be avoided in accordance with the applicable double taxation treaties. Double taxation is usually avoided through tax exemption (exempted income will be considered when calculating the applicable income tax rate).

Deductions can include special and extraordinary expenses, which are either claimed in full or up to a certain limit. Special expenses are personal or family expenditures and include:

• employee contributions to the German social security system in a threshold amount
• for taxpayers with German domicile: personal and family allowances which depend on personal circumstances
• church tax
• expenses for professional education
• maintenance payments in the case of divorce
• charitable donations in a threshold amount
• contributions to certain non-profit activities
• 30% of contributions to private schools (only school fees), which are governmental accepted, limitation to a maximum amount of €5,000/each child (also schools abroad in EU/EEA– area).

In addition to special expenses, resident taxpayers are entitled to tax relief with respect to extraordinary expenses. There are special kinds of allowances for children whose parents are entitled to receive a child allowance or an allowance for dependent children. There is also an old age percentage reduction for employees who are older than 64 years.

There is a withholding tax of 25% plus a 5.5% solidarity surcharge plus church tax (if applicable) on investment income and capital gains (flat tax).

A liability to German inheritance and gift tax depends on whether the individual or the deceased or donor maintains a domicile or habitual place of abode in Germany. Furthermore, certain assets located in Germany could be taxable. If the individual and the deceased or donors are close relatives, there are tax free amounts depending on the relationship.

No local taxes apply to individuals in Germany.

Real estate tax is applicable in Germany. The amount of real estate tax depends on the value of the real estate and the Federal State.

Social security contributions include pension insurance, unemployment insurance, nursing insurance and compulsory health insurance.

Social security contributions are salary dependent. There is an income limit up to which contributions are payable.

Income thresholds for 2024

                                              Annual €           Monthly €                 Rate of                                                                                                                           contribution*

West Germany      
Pension insurance                 90,600                 7,550                       18.6%
Unemployment insurance    90,600                 7,550                        2.6%
East Germany      
Pension insurance                 89,400                 7,450                        18.6%
Unemployment insurance    89,400                 7,450                        2.6%
Whole of Germany      
Compulsory health

insurance**                            62,100                  5,175                       14.6%
Nursing insurance*               62,100                  5,175                        3.4%
 
* Childless employees over the age of 23 must pay an additional 0.6%
** some insurances claim an additional amount

Income thresholds for 2025

                                                  Annual €            Monthly €               Rate of                                                                                                                            contribution*
Whole of Germany

(as of 2025)      
Pension insurance                     96,600                   8,050                  18.6%
Unemployment insurance        96,600                   8,050                   2.6%
Whole of Germany      
Compulsory

health insurance**                    66,150                    5,512.50              14.6%
Nursing insurance*                   66,150                     5,512.50             3.6 %

Stock options are treated as income from employment and subject to the individual progressive tax rates. The stock options are principally taxable at the time of exercise. According to the model treaty stock options, derived from an activity exercise in the other contracting state, are taxable in that state on a working day basis.

There is no wealth tax in Germany.

There are no other specific taxes in Germany in relation to expatriates.

Earnings description                                                        Planning possible
Base salary                                                                                       Yes
Bonus                                                                                                 Yes
Cost of living allowance                                                                  Yes
Housing                                                                                              Yes
Home leave                                                                                        Yes
Club membership                                                                             No
Moving expenses                                                                               Yes
Foreign service premiums                                                                Yes
Education/schooling                                                                        Yes