Taxes in Germany

• Employee illness or treatment: depending on the health insurance organisation, the contribution is between 0.90% and 4.1% and the reimbursement is between 50% and 80%
• Maternity leave: depending on the health insurance organisation the contribution is between 0.14% and 0.88% and the reimbursement is 100%
• Contribution to the insolvency fund: 0.06%.
• Work accident scheme, which depends on the industrial sector, but is generally 1.6%

Employees who belong to a church have to pay church tax, which is withheld from their total monthly taxable income. The church tax varies by federal state and is 8% to 9%.

The Solidarity Tax (also known as Soli) was created in 1991 to aid Germany’s economic reunification. The flat tax rate is 5.5% of the employee’s gross income. As of 1 January 2021, the application of the solidarity surcharge tax has been substantially reduced.

Child benefits are extended to all parents in Germany, regardless of their income, by the Family Benefits Office (Familienkasse) at the Federal Employment Agency. €255 monthly per child.

The child benefit can only be claimed by one of the parents, so married couples will need to decide who receives it. If they are separated, the parent who has primary custody should claim child benefit. If a child is living with someone who is not their parent, they can still claim child benefit.

Parents can continue to claim child benefits until:

• The child turns 18
• If the child is unemployed and registered as a job-seeker, up to the age of 21
• If the child is in education and training up to the age of 25
• If the child has a disability and cannot support themselves up to the age of 25

Besides child benefits, some parents can claim a supplementary child allowance (Kinderzuschlag). The current rate is €297 per month for each unmarried child under the age of 25 who lives in their household.

To qualify, the parent needs to fulfil the following conditions:

• Already receive child benefits
• Earn at least €900 per month before deductions; €600 for single parents
• Earn less than the maximum income limit, which varies according to the parents’ cost of living and is calculated individually by the Family Benefits Office

Parents can also claim extra assistance for school trips, school supplies and school meals.

Under certain conditions, a tax-free child allowance (Kinderfreibetrag) may also be granted to parents. The current rate is €6,627 per child. When assessing the parent’s income tax, the tax office (Finanzamt) will compare the amount of child benefit they have already received with the amount they could save if the tax-free child allowance were granted. If the parent is granted the child allowance, the tax relief given will be offset against the child benefit pay already received.

Parents can also make further tax savings by deducting 2/3 of their childcare expenses (max. €4,000/year) and 30% of school fees (max. €5,000/year). The tax relief from these allowances will also be balanced against the amount of child benefit already received.

There is an additional supplementary payment (Unterhaltsvorschuss) for single parents who receive no maintenance from the other parent to help cover costs. The amount of maintenance advance received depends on the child’s age:

• €227 per month for children up to 5 years old
• €299 per month for children aged 6 to 11 (inclusive)
• €394 per month for children age 12 to 17 (inclusive)*

* To qualify, children above the age of 12 and their parents must not receive unemployment benefit.

New parents who fulfil certain conditions are also eligible for the parental allowance (Elterngeld). This income-replacement benefit is important for offsetting the loss of earnings caused by a child’s birth, enabling parents to rest and spend time with their newborn children.

Parents make a tax deduction on their income based on their children’s education, whether in Germany or abroad (with limitations). To be eligible, the child must be:

• Older than 18 years of age
• Living outside the parents’ household

Deduction amounts to €1,200 per year. For children studying abroad, the amount may be reduced.