Income Tax

International employees in Germany are taxed on their worldwide income if they are considered to be residents of Germany. Residency is determined by the number of days spent in Germany in a given year. If an employee spends more than 183 days in Germany in a year, or an average of 90 days per year over four years, they are considered to be a resident.

Non-resident employees are only taxed on their income from German sources. This includes income from employment, business activities, and investments.

The German income tax system is progressive, meaning that the higher your income, the higher the tax rate you will pay. There are four tax brackets in Germany for 2023:

• Taxable income up to €10,908: 0%
• Taxable income from €10,909 to €62,810: 14% to 42%
• Taxable income from €62,811 to €277,825: 42%
• Taxable income over €277,825: 45%

In addition to income tax, international employees in Germany may also be required to pay church tax (Kirchensteuer). Church tax is a levy that is collected by the state on behalf of the recognized religious communities in Germany. The tax rate varies depending on the religious community and the state in which the employee lives.

Social security contributions

International employees in Germany are also required to pay social security contributions. These contributions are used to fund the German social security system, which provides benefits such as healthcare, pensions, and unemployment insurance.

The social security contribution rate in Germany is 18.6% of gross income. Half of this contribution is paid by the employee and the other half is paid by the employer.

Double taxation treaties

Germany has double taxation treaties with over 90 countries. These treaties help to prevent international employees from being taxed on the same income in both Germany and their home country.

Tax filing

International employees in Germany are required to file an annual tax return. The tax return must be filed by July 31st of the following year.

International employees can file their tax return online or by using a paper form. The Federal Central Tax Office (Bundeszentralamt für Steuern, BZSt) provides a number of resources to help international employees file their tax returns, including a guide in English.

Getting help

If you are an international employee in Germany and you have any questions about your taxes, you should contact a tax advisor. Tax advisors can help you to understand the German tax system and to ensure that you are filing your taxes correctly.