Your Tax ID (" Persönliche Steueridentifikationsnummer")
1) How to get it?
After you first register in Germany, a tax ID will be made for you by the Federal Central Tax Office (Bundeszentralamt für Steuern).
This 11 digit number should be sent to your address within a few weeks after the city registration (Anmeldung). You can also apply for your tax ID at the Federal Central Tax Office (Bundeszentralamt für Steuern). However, this will take around six weeks of waiting before your number will be sent to you.
2) What is it and why do I need it?
The tax ID will be assigned to you permanently and it will be recognised as a national standard. It is very important for your employer to have your tax ID so that all taxes can be paid correctly. You also need your tax ID when requesting your income tax refund. However, the first time you will probably need the tax ID is when opening a new bank account in Germany. If you are married and have kids, you need to keep in mind that every family member will receive a tax ID. This number will be required when applying for child benefits, KITA voucher or a change of your tax class.
3) How to change tax classes?
In order to change the tax class you need to fill out the attached form and send it to the local financial ministry (Finanzamt) that is responsible (depending where you are registered - you need to search for it).
If your spouse does not have income so far, your tax class should be 3/5 (the one who is earning more should have tax class 3).
If both of you earn equal income you can choose the tax class combination 4/4 which is equals tax class 1.
Please find general information below (provided by a certified tax consultant):
Taxes on income from employment are automatically withheld by the employer on behalf of the employee in Germany (withholding tax system on a monthly basis)
The amount of the withholding tax also depends – among other things – on the employee‘s tax class. The German tax system knows 6 tax classes.
The own tax class or the tax class combination (married people) does not determine the absolute final tax burden. It is only a measurement for prepayment purposes à Final tax burden is determined in a German income tax return!
Unmarried employees automatically are in tax class 1 (no marriage tax splitting; no child allowance considered); in case of a second job, taxes on this second job will be calculated on the basis of class 6 (high tax deductions)
Married people automatically have the tax class combination 4/4 (marriage tax splitting and child allowance considered if applicable; precondition: both spouses live in Germany)
Alternatively to tax class combination 4/4, married people can apply for a divergent tax class combination (e.g. 3/5 or 5/3). The right to apply for a divergent tax class combination also applies to spouses living abroad in the EU
Single parenting people are in tax class 2 (child allowance considered)
Depending on the individual income, the living situation and the tax class combination, the obligation to file income tax returns in Germany may apply!
If you have further questions, we are happy to connect you to our partner for taxes.
4) How income taxes work
Lohnsteuer, Soli, Kirchensteuer..
Once you receive your first salary, you'll notice very quickly, that taxes are a serious matter in Germany. Income tax ("Lohnsteuer"), solidarity surcharge ("Solidaritätszuschlag"), church tax ("Kirchensteuer") and pension, health, nursing, and unemployment insurance are deducted from your monthly gross wage by your employer. You can see how much that is and how much your net salary amounts to every month from your wage or salary slip.
Regarding the income tax the rule is: the higher your taxable income, the higher the rate of taxation, ranging between 14 % - 42 %.
Calculate your net income
To calculate your net income, you can use the "Brutto-Netto-Rechner".
5) Asking for a tax refund
At the end of one calendar year, you can ask the government to check whether you have paid too much income tax and ask for a refund. To do so, you submit your Income-tax declaration to the tax office. Check out "Taxfix" to do prepare your tax declaration and ask for a refund.
Contact
As we are not specialised and do not advice on your personal tax situation, we recommend to reach out directly to our partner that is specialised in international tax advisory:
Patrick-Marcel Hagner
Tax Advisor
Certified Advisor for International Tax Law
Phone: +49 211 900 979 103
E-Mail: hagner@smlm-partner.de
We suggest to mention that you come from Localyze. However, please be aware that SMLM Partner does not act as a subcontractor of Localyze. Once you establish contact with them for tax advice (which also includes advice on the choice of tax class), a client relationship is established which will enter into a fee agreement. Please reach out to them for a fee proposal for their service.