Information for Employees
Wage tax
Wage or income tax is deducted from the wages of employed persons. Generally speaking, the taxation process involves only these deductions, which are normally made once per month, unless the employer is required to file an annual employment tax declaration or it is determined at the end of a calendar year that the employee must file an income tax return. The legal basis for taxation is the Einkommensteuergesetz (Income Tax Act, EStG).
The extent of tax liability depends on whether the employee is partially or fully liable for taxes.
Foreign workers who are not registered as residents of Germany are regarded partially liable for taxes. Those who are registered as residents of Germany are considered fully liable for taxes. The German Income Tax Act contains a special provision for foreign employees who are partially liable for taxes and earn nearly all of their income in Germany. They may apply to be treated as fully liable for taxes and gain personal tax benefits from reclassification (if at least 90% of their earnings in a calendar year are subject to German income tax).
Employers are required to deduct income taxes from every wage or salary payment, regardless of whether an employee is classified as liable for income tax. In order to deduct the correct amount of income tax for every employee, the employer needs certain information about his employees, such as their tax class, any tax allowances they may have and membership in a religious denomination that is subject to church tax.
In order to facilitate the process of calculating their income tax, employees are assigned to one of several different tax classes on the basis of their personal circumstance. There are 6 tax classes numbered I to VI.
You must register with the appropriate local Finanzamt (Tax Authority) prior to your first period of employment. If you are employed as a cross-border worker in Germany, you need to register with the Finanzamt in the town or city in which your employer’s registered offices are located. If you are a registered resident of Germany, you should register with the Finanzamt in your town or city of residence. Application forms for classification as partially or fully liable for taxes can be obtained from the Finanzamt. Your Finanzamt is also responsible for determining or changing your tax class.
The Finanzamt will assign you a tax number or Tax ID. The Tax ID is an 11-digit number and is assigned by the Bundeszentralamt für Steuer (Federal Office of Taxation). It remains valid as long as you live. The Tax ID will be mailed to persons who have moved to Germany from abroad at the address at which they have registered as residents. Foreign employees without a fixed residence ordinarily do not have a Tax ID, and cannot apply for a Tax ID themselves.
Not everyone is required to file a tax return. However, every employee is advised to file a tax return in order to take optimum advantage of tax benefits (e.g. allowances for the costs of travel to work, etc.). Every individual is responsible for preparing and filing his or her own tax return. The deadline for filing a voluntary tax return expires on December 31 of the 4th following year.
The tax return for 2025 must be submitted to the tax office no later than July 31, 2026 and for 2026 to July 31, 2027.
Obligation to file a tax return due to receipt of short-time allowance (Kurzarbeitergeld) Short-time allowance is tax-free, but is subject to the so-called progression provision. If the total amount of wage replacement benefits received in a calendar year exceeds 410 euros, recipients of wage replacement benefits are obliged to file an income tax return.
Securing the energy allowance with the tax returnThe energy allowance is exempt from social security contributions, but it is subject to tax.There are cases in which payment of the flat-rate energy allowance can only be made as part of the income tax return for 2022, for example if- there is no active employment relationship as of September 1 (but earlier or later in the year)- the employer does not file an income tax return or only files an annual income tax return (because it only employs flat-rate taxed employees on a mini-job basis or the amount of income tax due is low or zero)- In the case of self-employed work, no advance income tax payment has yet been assessedEach tax return for 2022 will be checked by the tax office for a possible claim to the energy allowance. This happens automatically, you do not need to make an extra application for it. If you have not yet received the EPP, it will be fixed in the tax assessment. The 300 euros will then be added to your gross annual income and then deducted from the assessed income tax.
You may also make use of the services of tax consultants or income tax assistance associations. (These services are not provided free of charge.)
Further information is provided at: