Income tax is deducted automatically from your income from employment and tied to your tax ID. This is a number, which you receive in the form of a letter a few weeks after your local registration. The letter is an important document, which you should keep in a safe place, because a German tax ID stays valid throughout your life and is only issued once.
The amount of income tax deducted from your salary depends on your tax class – Steuerklasse, which in turn depends on your marital status, children and additional jobs you may take on. Six tax classes exist, denoted with roman numerals:
- I for singles
- II for single parents
- III/V or IV/IV for married couples
- VI for a second or third job.
If you have children, you are probably eligible for a child tax break and should let your employer’s HR department know when signing your contract or as soon as a new child is born.
While scholarships generally are not considered taxable income (consult the awarding body, if in doubt), your German salary will be taxable if it is above a specific yearly minimum amount. Note that following the first year of moving to Germany, you are obliged to make an income tax declaration about your world-wide income. Don’t be alarmed: Only your German income will be taxed, but your world-wide income is used to determine the income tax rate to be applied to your German income. Only once you have been living and working in Germany throughout the year, a declaration might not be mandatory anymore. Income tax declarations for a year are always due on the 31st of July of the following year.