Salary, taxes, social security
Introduction: your salary in Munich, Germany
Tax return, salary, tax deductions, tax ID number: The topic of money is not always easy to understand in Munich. This “Make it in Munich“ page will give you an overview of your income components. You will find a link to a tax calculator and a lot of further helpful information.
More on the tax system
Tax ID number, social security deductions, different tax classes: The German tax system does take some getting used to. Take a look around to get an overview of this important topic.
German salary: what you need to know
In Germany, things might be a bit different than what you are used to. Here is how it works:
Taxes and social security:
Before you get your final paycheck (called “net salary”), various deductions are taken out of your gross salary. These deductions fall into two categories: taxes and social security contributions.
Taxes:
This covers things like income tax, church tax (depending on your religion), and a solidarity surcharge.
Social security:
These contributions go towards benefits like healthcare, unemployment insurance, and pensions.
Your employer deducts this upfront. What you see on your payslip is lower than your gross salary – but these deductions are future benefits! Your tax bracket is influenced by many factors, like marriage or having children. You can find more information on the German tax classes and other types of taxes here.
If you are a member of certain churches, your employer also transfers the church tax to the tax office. However, you need to be officially registered as a member of the religious community for the tax to apply. Note that not all religions or communities are taxed, only those recognized by the state.
This income tax calculator (page in German) allows you to get an overview of your income tax deductions and quickly calculate your net salary from your gross salary.
The website Make it in Germany provides a comprehensive overview of topics such as salary, taxes and social security and a dedicated page on statutory health insurance. On the integreat app you can find information on taxes and social security contributions too.
The statutory minimum wage in Germany is currently € 12.82.
Here you can compare your salary with the running rates per job category:
- https://web.arbeitsagentur.de/entgeltatlas/ (page in German)
- https://www.lohnspiegel.de/index.htm (page in German)
Important
Paying your taxes and accurately declaring your income to the tax office (“Finanzamt“) are essential obligations in Germany. Tax evasion is a serious offense, and penalties can range from fines to prison sentences of up to 10 years.
Tax ID number: how to apply for it
Everyone who starts working in Germany receives a unique 11-digit tax ID number. It serves as your lifelong identifier for income tax purposes. Even children born in Germany get their own tax ID number – within three months of birth! This is important for applying for benefits like child allowance (“Kindergeld“) later.
As you work in Germany, you will need to provide your tax ID number in various situations, including to your employer. If you do not know the number, you can ask for it in writing from the Bundesamt für Steuern (federal tax office).
Tax return: claim your rights!
Germany’s annual tax return system allows you to claim various expenses that may reduce your tax bill. This could result in a tax refund or a lower tax payment to the tax office (“Finanzamt“).
While not everyone is required to file a tax return, it is best to check with the tax office. Filing a tax return can often result in a refund – it is worth considering, in any case!
Munich-specific taxes
Good to know: The City of Munich also charges taxes – for example, dog tax, business tax, or waste disposal fees. You can get help with your calculation, payment, and processing at a glance here (page in German).
Do you need help filing your tax return?
Navigating the tax return process feels overwhelming? Don’t hesitate to seek assistance: the Munich Tax Office (Finanzamt) itself may also be able to answer any questions you have. If not, get yourself a tax adviser (Steuerberater) through the VLH (Lohnsteuerhilfeverein Vereinigte Lohnsteuerhilfe e.V., page in German) – you need to become a member first, though.
Do you need more information? Check this link about tax declaration – or this one about the German welfare state.
The “Integreat App“ for Munich offers an overview of the tax system and tax declaration and many useful links.
