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What kinds of Taxes are due?
The word most mentioned in conjunction with the German tax system is “jungle.” Thanks to the many complicated rules and regulations in the tax code, tax consultants probably have the most secure jobs in the country. Unless you’re ready to spend years studying tax law, it’s probably worth it to get professional advice. A tax consultant usually costs around 200 euro.
Income Taxes
Income taxes will be deducted from your income or fellowship. The employer, your host institute, pays these directly to the state. There are exceptions. Fellowships in amounts up to 2,000 euro are tax free. If your stay in Germany is longer than half a year, you must pay taxes. If shorter than that, taxes must be paid in your home country. Instructors and researchers who come to Germany for two years can also pay taxes at home, but a prerequisite is that your activities in Germany concern themselves solely with teaching. Germany has entered agreements with a variety of countries regarding tax law. These so-called double taxation agreements determine in which country taxes must be paid.
How high are taxes here?
How much the fed-up taxpayer has to fork over to the government depends on several factors. Single people are hit the hardest. If you’re married, and especially if you’re the sole breadwinner and have children, you are treated much more kindly by the tax authorities. One tax that will be new to most visitors is the Church Tax. It’s at least nine percent of the amount that is due as income tax. If you follow a certain faith and wish to practice it in Germany, it’s best to ask at the Municipal Registration Office if you need to pay the church tax. Non-church goers and members of the Orthodox and Anglican Church are exempt from the tax.
Income Tax Returns
Those who have paid some tax must file an income tax return at the end of every year. That can be done from home if you’ve returned to your home country when the end of the year rolls around. Filing an income tax return almost always pays off, since most of the time the taxpayer has paid too much and is entitled to money back.
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