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Income tax vs Wage tax in Germany

Last activity 15 July 2012 by WorldExpat

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WorldExpat

Hi folks, I am wondering if the calculator in the following link is nearly correct for figuring out the deductions, or I should say almost all deduction from the brut to arrive to the net?: http://www.parmentier.de/steuer/steuer.htm?wagetax.htm

If not, can someone with experience or knowledge share what are the mandatory deductions, versus voluntary? It seems that beyond income tax, there other obligatory deductions and no way out it?!

Is there a minimum legal time off=paid holidays that an employer is obligated to give to an employee? If so, how many days/year?

Is there a status such as "expat" where a certain tax or a deduction could be spared, example - unemployment insurance, or anything else?

Thanks a lot in advance to those of you who could shed some light on that.

vroni

can't help you with taxes, but for paid time off:

the minimum number of paid vacation days per year is 24 (if you work 6 days/week, otherwise 20). in addition there are paid holidays. holidays depend on the state (except Oct 3, the only federal holiday). there are 9 to 13 holidays.

WorldExpat

Thanks for the reply Vroni! It seems many folks clicked on the topic, but only you replied!

I am eager to learn more about the tax system and just about all that is considered employment benefits and would like to compare this to the BE one. So far, it seems that the legal holidays in Germany are +4 compared to the legal in BE. However, in BE it is not uncommon that an employer would over 5-10 extra legal holidays, or some times even more, depending on the employer. On top of that, I think there are 9-10 bank holidays.

Do the holidays change depending on the days you work, meaning - if you work Wed-Sun, vs. Mon-Fri? If someone works 5 days a week, but one of the days is lets say Saturday is there a law or a rule that this person would get extra day PTO, or perhaps extra $ cause Saturday is part of the weekend?

beppi

WorldExpat wrote:

Hi folks, I am wondering if the calculator in the following link is nearly correct for figuring out the deductions, or I should say almost all deduction from the brut to arrive to the net?: http://www.parmentier.de/steuer/steuer.htm?wagetax.htm


The calculator seems accurate, but do you know exactly which options apply in your personal situation? The system is so complicated that sometimes even the tax authority doesn't know!

WorldExpat wrote:

If not, can someone with experience or knowledge share what are the mandatory deductions, versus voluntary? It seems that beyond income tax, there other obligatory deductions and no way out it?!


The listed tax and social security contributions are compulsory for employees. You might get some return (or have to pay more) when you make a tax declaration after the end of the year. And private health insurance might or might not be cheaper for you (again, complicated!).

WorldExpat wrote:

Is there a minimum legal time off=paid holidays that an employer is obligated to give to an employee? If so, how many days/year?


Minimum is 24 days a year (at 6-day-week), but most people get 30 days (at 5-day-week).

WorldExpat wrote:

Is there a status such as "expat" where a certain tax or a deduction could be spared, example - unemployment insurance, or anything else?


No. But if you leave Germany for good after less than 5 years, you can under certain circumstances get some part of your pension scheme contributions back (basically by donating the larger part to the government).

WorldExpat

Wow, beppi, many thanks for the reply and the good info!

I think I know which option applies to my situation... but can't swear by it!

How come most folks get 30 days PTO? Is it some sort of stimulation by the employers to give extra 10 days? Is it normal to have a 6days working week? I would be looking at a 5 days working week, so I guess then the legal holiday time=PTO would be 20 days.

Getting the pension contributions back is a good option, but I think the tax is what is a major bite into the final net. :(

Please share other info if you know, e.g. are there other employment benefits that folks get such as reimbursement for commute expenses or "reps" checks (meal checks which are a common thing in BE), echo checks, etc.?

vroni

there are tax benefits for commute expenses. depends on the distance to work. i believe you can deduct 30 cents per kilometer times number of days worked from your taxable income.
some get restaurantchecks if the company does not have a cafeteria, but i don't know how common
it is.
for pto: most of my friends seem to get 28 days. my dad gets 33 days, but he has worked for the same company for a long time, so his contract is quite old.
other benefits to consider: compare what happens if you are sick. no idea about rules in other european countries, but in germany your salary is paid in full for 6 weeks and then the health insurance pays for the next 1.5 years or so (about 70% of your income). also if you have kids you may be eligible for kindergeld (~184 euro per child per month). there is additional paid time off after a child is born.
check if you would get christmas + vacation bonuses.

WorldExpat

vroni many thanks for all the good info!

You mentioned vacation bonuses... is there such a thing as a 13th salary? Also, is there such a thing as getting 92% of your salary if you've worked at the same employer a whole year? This latter one in Belgium you get it, and it is $ for your earned holidays. So in BE despite the fact that you get PTO, for which time you do get paid regular salary, on top of that at the end of may everyone gets 92% of their salary as an additional check as well. But cause it is considered somewhat of a bonus, the tax on this is >60%, I think it is almost 70 actually. But still, it is something.

Nice to know about the health benefits. I hope I will never have to use them!

beppi

Yes, legal minimum leave for 5-day-week is 20 days per year, but most people (incl. everyone I know) is at 30 days for 5-day-week.
Commuting expenses are tax-deductible as vroni said above.
Subsidised meals at company canteens or contracted restaurants are voluntary (not every employer does it) and only allowed in a limited manner.
13th month salary (often called Chistmas or Vacation bonus) and sometimes 14th month are possible - check your contract! Other bonuses, especially performance-related ones, are uncommon and small if they exist at all. Again check your contract or ask HR!

WorldExpat

This a very good news about the holidays beppi. :) Thanks for the info. It helps put things into perspective.

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