Tax System in Germany

Understanding the tax system is vital when moving to a new country. Below is an account of Germany’s income tax system accurate as of 2019. This account was taken straight from our “Berlin Relocation Guide” which can be downloaded here: https://www.sigmarrecruitment.eu/relocating-to-germany/berlin

If you are a resident of Germany, you have full income tax liability. All income earned in Germany and abroad is subject to German income tax and a solidarity surcharge. Germany’s income tax system is progressive, meaning that the rate of tax increases as income increases ranging from 0–45%. For married couples, rates are more favorable when tax is filed jointly. The tax year runs from January 1st to December 31st. If you do have to file your own taxes, the cutoff date is May 31st for the preceding year.

The rates for 2019 are;

0 – 9,169 0%

9,169 - 14,255 14-24%

14-256 - 55,960 24-42%

55,691 – 265,236 42%

265,327+ 45%

Solidarity Surcharge

The solidarity surcharge (Solidaritaetszuschlag) is an additional fee on income tax, capital gains tax and corporate tax in Germany. This means that the solidarity surcharge is to be paid by every natural and legal person that owes one of the above-mentioned taxes in Germany. This surcharge is levied at 5.5% of the income tax for higher incomes.

Withholding/Pay as you Earn Tax

Income from employed work and capital income are taxed at the source, meaning you as a tax payer will not need to file your own taxes come year end. The tax owed will be deducted and retained at the source by the employer or by the bank before the earnings are payed out. If the employer is a German company or a foreign enterprise with a permanent establishment or a representative in Germany, the employer is legally obliged to withhold taxes from an employee’s salary and to remit the taxes to the tax office monthly.

Paying Income Tax

When you are taxed at the source, your tax will be based on your personal status. You will fall into a certain class that will directly affect how much tax you pay. Below are the six types of tax classes:

Class 1: Single

Class 2: Single parent (living alone with the child/children)

Class 3: Married and spouse (when spouse does not have an income)

Class 4: Married and similar income to spouse

Class 5: Opposite of class 3, i.e this is the class the second earner chooses if the spouse opts for class 3

Class 6: For a second job or for deduction without proper employee information

The taxation at source for capital income will be done with a flat tax rate of 25% (add solidarity surcharge of 5.5% of the amount of tax).

7 of the Best Tech Offices Around The World

In recent times we have seen tech companies go to extreme lengths to provide their staff with incredible workspaces in a bid to attract and retain the best talent in the business. The modern office has experienced a number of changes in the last twenty years or so. We have witnessed the death of cubicle farms with the rise of open floorplans and the tech revolution bringing ping pong tables, beer on tap and a wild array of amenities and designs. In the current tech market, the locus of power resides with the employee. According to Forbes, 93% of workers in the tech industry say that they will stay with a company longer that offers healthier workspace benefits such as wellness rooms, entertainment facilities and healthy food options. We have complied a list of some of the best tech offices from around the world, how does your office compare to these stunning spaces? Etsy Headquarters – Brooklyn, NY Etsy’s solar powered headquarters is a work of beauty. The interior of the office is decorated exclusively with products designed and manufactured by Etsy sellers. Boasting cosy chairs, arts and craft stations and natural wood, the space has a homely feel to it and is full of natural light. Images: Etsy Pionen’s White Mountain Office – Stockholm, Sweden Allegedly inspired by villains’ lairs in James Bond movies, the workspace combines all four elements – earth, wind, fire and water – to ‘bring the outside in’ for workers, according to the architects. This creative office space for the Swedesh internet provider is situated at the base of a mountain, somewhat ironic considering this may not offer the best Wi-Fi speeds. Images: Archive Expo Zynga Headquarters – San Francisco, CA In true Silicon Valley style, Zynga house their 1,700 talented employees in an enormous office complex packed full of entertainment such as ping pong, sketching areas and even zombie shooting areas. This impressive complex has been put up for sale by the social gaming service, just in case you have a spare $600 million lying around. Images: Zynga Airbnb – San Francisco Airbnb’s HQ in San Francisco is truly a work of art. Inspired entirely by the site’s listings, the workspaces are custom made in a variety of ways. Workspaces include house boats, tents, shepherd huts and beach cabins. The underlying concept behind the design is to have employees working in their ‘own home’, allowing staff the opportunity to be their most productive self. Images: Airbnb Google – Everywhere Google, arguably the birthplace of the modern tech office, host their global workforce in an array of stunning complexes across the world. From hanging work cubicles in the Zurich office, to the swings and cars featured in the Mexican base, Google employees are always treated to aesthetic and visual stimuli to keep their brain synapses firing. Images: Google Apple Park, Cupertino, CA Apple’s headquarters looks like something out of sci-movie. The stunning building features 360-degree views with the walls made completely out of glass. The colossal building is a mile in circumference and cost approximately $5 billion to build, yes billion. The interior is flooded with natural light, open plan workspaces and minimalist sleek décor, trademark Apple design. Despite Apple’s significant investment, employees have expressed their concerns with the open plan layout with some threatening to quit if they are forced to work in shared spaces. Images: Apple Facebook, Palo Alto, California Facebook recently completed a major extension of their campus in 2018. Called MPK 21, the space is comprised of numerous flexible workspaces surrounded by tropical plants. The campus also features a central courtyard, the “town square” which is complete with restaurants, amenities and redwood trees. Images: Deezen

Start-up vs Large Corporation

Join a start-up or a large corporation? This polarizing question has no clear-cut answer but is consistently debated in the software development world. Both start-ups and established corporations come with their own individual set of advantages and disadvantages. There is no black and white answer, it all depends on what you value most. Method vs Madness This is one of the most distinctive differences between the two. In a large corporation, there are clear and well-established processes in place that dictate everything. All tasks are divided into work items and Gantt charts and then equally spread across the team. Everyone fulfils their specialised job role with changes to the process only occurring with pre-emptive planning. Start-ups on the other hand operate on an ad-hoc, needs must basis. Whatever is needed at that time or in the very near future is prioritised. Tasks are not divided equally among the team, nor are they debated over numerous meetings. Work processes and tasks can change very quickly as the start-up moves into a different direction or it loses investment or something else entirely. Corporations’ organised and clearly defined processes remove a lot of ambiguity and ensure that developers are not overworked. However, it often stifles work productivity as time is lost through constant meetings and ‘going through the motions’ of bureaucracy. In a start-up, developers are afforded full responsibility of their work which is very attractive to many. You are likely to be your own manager removing the time-consuming meetings and bureaucratic processes. However, this does come at a cost. If something goes wrong, it is on you to fix it. It doesn’t matter if its 5pm on a Friday or if you already have an unmanageable to-do list, it is up to you to fix it. Professional Development & Career Advancement This is a grey area as both start-ups and large corporations offer great paths to professional development and career advancement but in very different ways. In a large corporation, you will learn valuable skills such as navigating large-scale projects, how to effectively integrate teams, how to work with mature code and the inner workings of large organisations. In addition, you will have a lot of support from developers within the organisation and from extensive training usually paid for and provided by your company. There are clear paths to career advancement on a merit-basis. Those who have clearly demonstrated that they are the best for the job or promotion, tend to get it. On the flip side, start-ups give you the chance to gain working experience in many, often cutting-edge technologies. You will likely have the opportunity to make important architecture yourself while working in different roles on different parts of projects. The support system will however naturally be lower. You will likely work with a select few very smart individuals, but Google will be your best friend for solving issues. Career advancement can be very quick as you will grow as the start-up grows. The earlier you get in, the higher you will advance all going to plan. If you excel in an autonomous role where you dictate how and what work is done, a start-up will work for you. If you excel in a position with clear direction and a solid support system, a large corporation is for you. Pay & Compensation This tends to be the deal breaker for many. Naturally, large corporations can offer a lot in terms of salary and overall remuneration packages. Heavy hitters such as Google, Facebook and Amazon often offer above market salaries with incredible benefit packages to lure in the best talent in the market. Start-ups cannot afford to match the big corporate outfits. You are likely to do the job of three people for the price of less than one in the early days. You will have to acclimatise to a lower standard of living, however there is always the chance that it could pay off in the future if the start-up is a success. Only you will know which one is for you. Start-ups are risky and require a lot of hard-work but they can pay off in a big way. Large corporations are safe, slow moving but can also offer a lot. It all comes down to what you value most and your career aspirations.

Tax System in Germany