Taxation in Germany

Taxation in Germany

The German federal government (Bundesregierung) receives the majority of its income from tax revenues. The Federal Ministry of Finance (Bundesministerium der Finanzen) is responsible for all aspects of tax and revenue legislation, while the Federal Central Tax Office (Bundeszentralamt für Steuern - BZSt) and the regional offices (Landesbehörden) execute this legislation. If you are working in Germany, and thus earning money, you must pay taxes.

Taxation authorities in Germany

The administration and revenue of taxes in Germany is split between the federal government and the federal states (Bundesländer). The Federal Central Tax Office acts on the behalf of the federal government and is responsible for:

  • Issuing tax IDs
  • International tax matters (such as double taxation agreements)
  • Federal tax audits

Most taxes are administered by each federal state’s regional office (Landesbehörde), via the local tax office (Finanzamt). The taxes they are responsible for include:

  • VAT and income tax (which are shared equally between the Federal Government and the Federal States)
  • Inheritance tax
  • Real property tax
  • Taxes on pets, such as the dog tax

The German tax system

What are the most common types of tax that you will encounter as an expat working in Germany? How much tax do you need to pay and how do you pay it? Find out everything you need to know about the German tax system.

The annual tax return in Germany

Many workers in Germany choose to submit an annual tax declaration. Are you obliged to submit an income tax return? What tax deductions can you benefit from? Here’s the key information on the German annual tax return.

ELSTER (Elektronische Steuererklärung)

Many people in Germany now do the bulk of their tax administration online, using an online tax office system called ELSTER (ELektronische STeuerERklärung). If you are a business owner or a freelancer, you may be obliged to use ELSTER; otherwise you might just want to take advantage of the features that make doing online tax returns much quicker and simpler. Our ELSTER page walks you through the process of registering for an account and completing your annual tax return online. 

Tax advisors in Germany

No one likes doing their taxes, not even German citizens. When even the Federal Ministry of Finance admits that taxes in Germany are “complicated”, many expats find themselves scratching their heads. If you are struggling with your taxes, you might benefit from our list of English-speaking tax advisors in Germany.

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