2023 in Germany: All of the changes you need to know about
Thanks to Germany’s relatively new government, there is whopping list of major changes set to hit the country in 2023. So while you’re counting down the days before we ring in the New Year, here’s a definitive guide to what's changing as 2022 becomes 2023.
Changes to social security in Germany
If you receive or think you may be newly eligible for any social security benefits in Germany, you’ll want to know about these key changes in 2023:
Social security contribution rates rise
Social security rates are calculated each year to make sure that the system stays stable. In 2023 the ceiling for statutory health insurance contributions will rise to 59.850 euros per year (4.987,50 euros per month). This means that workers in Germany signed up to the state health insurance system must pay contributions on their salary up to this limit.
After remaining static in 2022, the compulsory insurance limit will also rise to 66.000 euros per year (5.550 euros per month). If you earn 66.000 euros or more per year in 2023 you can opt to switch to private health insurance.
The threshold for contributions towards pensions is also set to change. In states across former East Germany the threshold will rise by 350 euros to 7.100 euros per month. In states of former West Germany, the threshold will be 7.300 euros per month, an increase of 250 euros. The average remuneration for pension insurance, which is based on the average earnings of all contributors and determines the “pension points” (Entgeltpunkte) every year, is set to increase to 43.142 euros per year for 2023.
Health insurance payments
People who use a statutory health insurance provider in Germany will see their monthly payments increase by an average of 1,6 percent next year. The average payment amount will rise by 0,3 percent in comparison to 2022. These amounts are determined by individual health insurance providers.
Hartz IV becomes Bürgergeld
The amount that recipients are set to receive from 2023 is not standard, but will rather be calculated based on the number of hours they worked in their previous job and how much their salary or hourly rate was. In general, claimants will receive around 50 euros more per month.
Another major change is the scrapping of the so-called "placement priority" upon which Hartz IV was founded: the priority for claimants to re-enter work regardless of the temporary or long-term nature of the new job. Come January 1, 2023 an emphasis will be placed on finding new, long-term employment contracts. Recipients will also be eligible for additional financial support to complete training couroses.
Kindergeld will see historical increase
This means that, for a family's first two children, the monthly payment will rise from 219 to 250 euros per child per month. For the third child the monthly amount will rise from 225 to 250 euros. Kindergeld payments for the fourth child and subsequent children already stand at 250 euros per month and will remain the same. The reform amounts to a historic rise for Kindergeld payments in Germany.
Minimum child maintenance payments to rise
Accordingly, children up to the age of six will be entitled to a minimum maintenance of 437 euros per month, an increase of 41 euros. For children aged between six and 11, the minimum payment is increasing by 47 euros to at least 502 euros per month. For children aged 12 to 17, parents will have to pay at least 588 euros per month. Children above the age of 18 who are still in education will be entitled to 628 euros per month.
Wohngeld benefits expanded
From January 1, 2023 the government will expand its scheme for Wohngeld housing benefit. 1,4 million people across Germany who are expected to start receiving Wohngeld in the new year will likely have their payments delayed due to a rush of applications.
The government’s reforms will not just increase income thresholds but also restructure Wohngeld payments. The payments will soon include a permanent subsidy payment for heating costs. On average, Wohngeld monthly payments are set to increase by an average of 190 euros. Once the rates increase, eligible households in Germany will be given an average of 370 euros per month to help with the cost of rent, mortgages and utilities.
Changes affecting working people
There are a number of new regulations which will reshape working life in Germany in 2023:
Electronic working incapacity certificates
From 2023 onwards working incapacity certificates will go digital. If you are unwell and covered by statutory health insurance you will no longer have to give your employer the yellow slip (gelber Schein). Instead it will be transmitted electronically by your doctor.
Electronic job centre certificates
Processes at the job centre in Germany are also set to be simplified in the new year. From January 1, 2023 if you have lost your job, you and your former employer must send certain documents to the job centre electronically. These three documents include: certificates of employment (Arbeitsbescheinigung), EU certificates of employment (EU-Arbeitsbescheinigung) and certificates of supplementary income (Nebeneinkommensbescheinigung).
Increase to “home office flat rate” allowance
In a bid to offset the extra costs incurred by employees who were forced to switch to the home office when the coronavirus pandemic first broke out in 2020, the federal government agreed to implement a so-called “home office flat rate” allowance that lets employees deduct five euros on their annual tax return for every day they worked from home.
Originally, employees were allowed to deduct a maximum of 600 euros per year, but this will now increase to 1.000 euros annually.
Midi-job maximum income rise
The maximum amount that can be earned in a midi-job in Germany will rise in the new year. People who are employed in midi-jobs will be able to earn 2.000 euros per month rather than 1.600. Up to the 2.000-euro limit, employees pay reduced contributions to social security.
Apprenticeship minimum wage increased
People who are carrying out an apprenticeship in 2023 can look forward to a pay rise. The statutory apprenticeship minimum wage will increase from 585 euros to 620 euros per month. For the second, third and fourth apprenticeship year there will be additional increases of 18 percent, 35 percent and 40 percent respectively. These percentages are calculated based on the wage of the first year.
Employee holidays expire after three years
From 2023, people working in Germany will be able to carry over their unused holidays for up to three years. And there is another great catch that favours workers: back in September the European Court of Justice (ECJ) ruled that deadlines for employees to take holiday days are only valid if they have been officially informed of time limits by employers.
However, 2023 is looking like a spectacular year for maximising holiday time, so you might not want to delay the breaks.
Work clock out times now legally required
Following another ECJ ruling in September, employers in Germany will soon have to record the location, start time, duration and end of working time of their employees. The ruling is designed to prevent people working unpaid overtime, although there are no specific rules as to how it must be implemented and who exactly should record the hours worked.
Changes to the tax system in Germany
Taxes are always a confusing territory in Germany. Here are the most important changes that are coming to taxation in 2023.
Basic tax-free basic allowance threshold to rise
In 2023, people who are earning in Germany will be able to make more without having to pay tax. The basic tax-free allowance (Grundfreibetrag) will rise to 10.908 euros for the tax year of 2023. Anyone who earns less than this will not pay any income tax. For married couples filing jointly the limit is 20.694 euros.
Tax-free saver's allowance threshold to rise
The amount of money that people in Germany can make on savings and investments without having to pay tax (known as the Sparerfreibetrag) is also set to rise in the new year: by around 25 percent, from 801 euros to 1.000 euros. For couples who are married and have their income assessed jointly the amount will rise from 1.602 euros to 2.000 euros.
Employee lump sum
The amount that employees can deduct from taxes for specialist literature, work equipment and professional travel will also rise in 2023, from 1.000 euros to 1.200 euros. If employees travel 21 kilometres or more to work it will also be possible to claim costs of 38 cents per km after the 21st kilometre.
Real property tax declaration deadline extended
As part of a major overhaul of property taxes, the German government is asking all property owners to provide some information about their properties and land, in the form of a real property tax declaration (Grundsteuererklärung). This will be used to calculate the new property tax rates, which will probably be payable from 2025.
The original October 2022 deadline for submitting the declaration has been extended by three months, until January 31, 2023. You can find out more detailed information about the return here.
Smoking in Germany is still relatively affordable, but the tax payable on cigarettes, cigarillos and tobacco will rise in 2023. A packet of cigarettes will increase in price by an average of 18 cents.
Changes to transport
2022 was the year of the beloved 9-euro ticket, so can any German transport policy that follows in 2023 ever live up to its success?
The Deutschlandticket is set to arrive in 2023, offering unlimited travel on regional and public transport across Germany for just 49 euros per month - including buses, trams, U-bahns, S-bahns and regional trains, but not long-distance trains like ICs, ICEs and ECs run by Deutsche Bahn. The ticket will be offered digitally as a subscription that can be cancelled monthly, meaning users are not locked into an annual subscription, as is often the case with season tickets.
FlixBus, one of the major providers of coach services in Germany, has criticised the fact that it was left out of the 9-euro ticket offer, and is reportedly in talks with the federal government to make its bus services, which connect scores of German cities, part of the scheme.
The ticket was first reported to be expected in March, now it is looking more likely that it will only arrive in May.
Subsidies for electric cars
People who want to buy a hybrid electric car in Germany from 2023 onwards will no longer be granted government subsidies. Premiums for purely electric vehicles will also decrease, and from September 1, 2023 the subsidy will be limited to private individuals.
Driving licence updates for some
If you have a pink or grey German driving licence and you were born between 1959 and 1964, you must renew your licence by January 19, 2023! The updated version will be a forgery-proof EU driving licence.
Changes affecting consumers
Costs of living have been changing dramatically throughout 2022 and there are a number of things that are set to become more expensive in Germany over the next year too:
Gas price cap arrives
Germany’s now well-known gas price cap will come into force from March 2023 and is currently expected to last until April 2024.
Under the gap price cap, 80 percent of a household's usual consumption (calculated according to the previous year's consumption) will be capped at 12 cents per kilowatt hour (kWh), while any consumption above this will be charged at the going market rate. The state will then make up the difference between the capped price and prices paid by gas importers.
The government also announced in November that gas price cap rates will be retroactively extended to household utility costs from January and February 2023.
Landlords to pay heating climate levy
From January onwards landlords will be required to contribute to the climate levy, which is intended to reduce damaging carbon dioxide emissions, for their tenants’ heating. If a house or building is not effectively insulated, the price is likely to be higher. Until now, the financial burden has always been on those who rent.
Reusable packaging obligation for takeaways
Restaurants and cafes in Germany must offer a reusable alternative to disposable takeaway packaging from January 2023. Businesses will still be able to offer disposable packaging as well.
Bakeries and butchers are also obliged to join the scheme, though small businesses that have a maximum of five employees in a space no bigger than 80 square metres are exempt.
Animal products must advertise rearing methods
In October 2022 the German government passed a new law changing regulations around advertising how animals are farmed. In the new year, animal products in Germany must be labelled with information about what kind of methods farmers use to rear animals. At first, animal products from pigs are the only ones that will be affected by the law.
2023 is almost here
Unless otherwise stated, all of these new laws come into effect on January 1, 2023. Think we’ve missed a major change? Please let us know in the comments below. Guten Rutsch!