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Income Tax

The most updated information about the German Income tax is given on the website 

http://ITR.germanymantra.com/


German social security refund for Indians
Germany has very systematic income tax system.

As in India, we have TDS system, here also income tax is deducted from your salary directly.

Tax classes (Steuerklasse)

Most of Indians falls into Tax class I or III (One or three). If both partners are working then tax class IV.
Tax Class
Description
 I  Those single or separated, but not falling into either categories II or III.
 II  Single and separated, with a child, entitling them to a child's allowance.
 III  “Married”, or “widowed employees who are within the first year of a
spouse's death”
 IV  Married employees both of whom receive income
 V Married persons who would normally fall into category IV, but whose
spouse is in tax class III.
 VI Employees who receive income from other employment on other, or
several different tax cards (Lohnsteuerkarte).

Tax card (Lohnsteuerkarte)

  • Tax cards (Lohnsteuerkarte) are issued by the local registry office (Rathaus or Einwohnermeldeamt) on production of proof of residence, at the beginning of the calender year. This card will indicate the appropriate tax grouping according to the individual's personal status. Generally Lohnsteuerkarte is dispatched to your address automatically,but in case you don't receive you need to contact local registry office.
  • Wage tax for all employees is deducted by the employer and forwarded to the responsible tax office (Finanzamt).
  • Tax return needs to filed in next calender year to claim any excess tax. This is assessed either by a so called annual wage tax settlement (Lohnsteuer-Jahresausgleich), or by assessment application(Antragsveranlagung).

Other Statutory deductions

  1. Solidarity surcharge
  2. Church tax
  3. Employee´s share in health insurance
  4. Nursing insurance scheme
  5. Pension insurance fund
  6. Unemployment insurance
Following table shows various types of insurance and contributions of employee
Insurance Name
(In German)
Insurance Name
(In English)
Employee Contribution
Employer Contribution
Total Contribution
Rentenversicherung
(refundable)
Pension insurance 9.95% 9.95% 19.90%
Arbeitslosenversicherung Unemployment insurance 1.40% 1.40% 2.80%
Krankenversicherung Health insurance 7.45% 6.55% 14%
Pflegeversicherung Nursing care insurance 0.975% 0.975% 1.95%

Total 19.78%

Tax Return (Einkommensteuererklärung)

  1. Because the financial year is from January to December, The tax return is filed after January.
  2. The tax refund can be done to a German bank account. It can be your own account or someone else. It is possible to get refund in Indian account also using SWIFT, but it is recommended to use German bank account as Finanzamt understand it better.
  3. You get a statement of income and tax payment from your employer. It is like Form16 or India. This is called Lohnsteuerbescheinigung

Last date for filing tax return

If you are entitled to get refund from tax office, then you can apply for return in next 4 years. So in Current Year 2014, it is possible to apply tax return of year 2010, 2011, 2012 and 2013. But if you are supposed to pay taxes then you should apply before 31st May of Next year.

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Surendra Jain,
Sep 22, 2010, 12:20 AM
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