Surprisingly, the best idea about the German tax code you will get in the Netherlands. To be precise: In Amsterdam in the Library of the International Bureau of Fiscal Documentation (IBFD).
The bureau has one of the biggest collections of international tax law: 2.000 meters of shelves, full of books with tax codes from around the world.
To get an idea how huge the tax code of Germany is, you could follow the example of Albert Rädler. The finance scientist measured the length of the German tax code. With a yardstick!
200 meters of shelves cover the German tax code in the Library. That’s 10 per cent of all text about taxes in the world. But Germany is only one out of 194 countries on earth…
The “logic” behind the German tax system
Germany has a progressive tax system. That means that for your first euros of income you will pay a very low tax. For every euro that you earn more the tax burden will rise. Singles can earn 8.130 EUR per year tax free. This sum rises in 2014 to 8.354 EUR. Married couples can double that sum.
After this sum every euro you earn will be taxed with a higher percentage. It starts with 14% when you earn 8.130 EUR plus 1,00 EUR. The maximum tax rate in Germany is 42 per cent.
On top of this you also have to pay “Solidaritätszuschlag”. A tax of up to 5.5 per cent which was introduced to pay for the German Reunion.
The promise at the time was that this extra tax would last only 5 years. Now it’s 24 years later and the tax is still alive and kicking…
How to calculate your taxes in Germany
Not surprinsingly it is nearly impossible to calculate your taxes in Germany manually. Too many factors influence your actual tax burden. It makes a difference if you are married, if you have children and even if you are a member of a recognized church in Germany.
Luckily, the internet came along. So, now you can get a rough idea about your tax burden with just a few clicks. (For precise numbers I strongly advice to consult a tax advisor)
Of course all those tax calculators for German taxes are in… well, German. To help you use them Immigrant Spirit provdes a translation of a tax calculators for Germany.
Lower taxes in Germany?
The reason why German tax law is so complicated is the wish to be fair to everyone. Germans also want to be very precise in their rules, so that everyone knows the law.
Obviously that doesn’t work. In todays tax law the clever people take all the benefits and deductions and those who are less financially sophisticated pay the full tax load.
Two good tips about German taxes
1. Hire a good tax advisor
2. Don’t bother with illegal ways to save taxes. There are plenty of legal ones.
And here you find the translations.
Have you made the same experience?
You are well educated, you have professional experience and most important: You have drive and ambition. You want to make a contribution and build a good career.
But German employers don't value your talent. You apply for job after job. You spent hours editing your CV and cover letter to fit perfectly. And then: You don't even get an answer.
There is a way forward! Chris Pyak and the rest of us at Immigrant Spirit GmbH: We want you to succeed.