Tax System in Germany

Self-Employment in Germany
April 8, 2020
Changing the Name and Structure of your Company
May 4, 2020

As an investor or entrepreneur who has just entered Germany to start business, it is very wise to extend your knowledge in how the tax system works in Germany. Like many other developed countries, the main income of the German government is the incomes coming from taxes and German authorities take it quite seriously. Although it should be noted that the amount of tax to be paid in Germany is reasonable when compared to other western European countries. Knowing the tax structure
Germany will help you later optimize your business operation and maximize your profit in the smartest possible way.

First, we start with one of the most significant types of taxes for business owners in Germany which is income tax (Einkommensteuer) as you are going to deal with it from the very beginning of your presence in Germany and of course you will do it when you make profits.

In this article we are going to have a quick glance at the general tax structure in Germany and how we can calculate the income tax. However, we need to answer few questions in advance:

Who is submitting your tax declaration to the local tax office?

It should be noted that all jobs and businesses in Germany, will pay their taxes based upon their annual income. How to register income and how to deduct tax from it is very dependent on the type of your business or job. If you are an employee, it is the duty of your employer to automatically pay your income and solitary tax (deducted from your salary) to the tax office
on your behalf .

However, if you are working as a self employed person, this is you who is in charge of submitting all tax declarations which could also be done (preferably) by your tax consultant/ bookkeeper. (Steuerberater/Buchhalter) in Germany. Also bear in mind that the tax rate changes with your annual income.

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