When you decide to move to Germany, and Berlin in particular, it is important to understand what the cost of living in Berlin is. Each municipality in Germany have different tax rates and housing costs among others, therefore, it is wise to understand if you can live comfortably in Berlin.
The cost of living also depends on if you are self-employed or a freelancer. Self-employed persons generally have a higher health insurance burden compared to employees, who get half covered by their employer. At the same time self-employed persons may be liable for fewer tax obligations and better tax deduction opportunities to minimise your tax bill.
Every German resident must pay the various taxes applicable when working in Germany. Not all taxes apply to everyone, and the level of taxes applicable depends on if you are self-employed or employed for example.
Income Tax (Einkommensteuer)
German income tax is applicable in brackets, so the amount payable is dependent on your income. Employees get their tax deducted automatically by their employer while self-employed persons must submit their tax declaration to the Finanzamt and pay taxes themselves. There is a minimum tax bracket and a upper income tax charge of 42%.
Church Tax (Kirchensteuer)
In Germany, persons part of registered and recognised religious communities are required to pay church tax. The amount payable is around 9%, but every federal state has their own laws and rates. It is considered as a special expense and can be deducted from your income tax.
There may be various other taxes applicable depending on your situation. For example, self-employed persons must also pay trade tax and VAT. Other taxes such as capital gains tax and solidarity tax may be payable for some. If you are self-employed, you can read the self-employed tax guide.
Health Insurance (Krankenversicherung)
Health insurance in Germany is mandatory and can greatly determine the cost of living in Berlin. The total cost is determined by various factors and mainly if you are insured via the public health insurance or a private health insurance. The health insurance options in Germany can be difficult to understand. Employees get half the health insurance cost covered by their employer, while self-employed persons must pay the entire amount themselves (but it can be tax deductible).
Nursing care insurance (Pflegeversicherung)
Generally, private health insurance in Germany includes the mandatory nursing care insurance. For public health insurance, this adds between 3% and 3,3% of your income, but the employer covers half of the cost.
Pension Insurance (Rentenversicherung)
Contributions to the pension insurance is mandatory for public health insurance. The cost is again split between you and your employer. Self-employed persons do not require to pay state pension constructions, but are equally not eligible for it.
Unemployment insurance (Arbeitslosenversicherung)
Equally to the pension insurance, unemployment insurance is payable as part of your health insurance. You will be eligible for unemployment benefits. Self-employed persons are not required to pay this, but it certainly may be a good idea to cover yourself for unforeseen chefs in employment.
Liability Insurance (Haftpflichtversicherung)
A liability insurance in Germany can cover you for any act that you commit that would be deemed negligent in a German court. This may be injuries for example and the German law has no limit. This means you could be liable for large sums. A liability insurance is a cheap option, generally 5 EUR per month, and covers you for such scenarios. If you own a pet, you may also be required to pay liability insurance specially for pets.
Rent in Berlin
Rent is probably the biggest expense and there are various options available in Berlin. Generally there are two options;
- Renting a room; or
- Renting an apartment.
Renting a room means the apartment or house is shared among several persons and often include a shared bathroom, kitchen and living area. This usually costs between 300 EUR and 600 EUR. Renting an apartment in Berlin generally costs between 600 EUR and 1,500 EUR.
There is also a difference between rents, referred to as Kaltmiete (cold rent) and Warmmiete (warm rent). The difference are utility bills such has heating and hot water are included. Take this into account when renting in Berlin.
Outside the “Ring”, which is the centre of Berlin, accommodation is often lower than in the centre. It is however still quite central and easy accessible. Consider public transport costs when deciding to live outside the city centre.
If you decide to live less centrally, make sure you consider the cost and travel time if you work in the city centre. A monthly pass for public transport generally costs between 44 EUR and 86 EUR per month. Single trips generally cost 3 EUR.
Central heating and hot water is included in the so called “warm rent”. However you still need to pay electricity for remaining things such as lighting and appliances. You can generally budget 40 EUR per month, but more if you have a so called “cold rent”.
Internet and Mobile Phone
The cost for internet and mobile phone usage vary greatly depending on the plan you choose. Generally, you can budget around 80 EUR per month in total for these services. You can of course save money by getting a prepaid mobile phone for example, and lower your telephone costs.
Similar to many other European countries, Germany imposes a TV tax to every household. This is paid once, per household, every 3 months and cost 17.50 EUR per month.
Although the above are the most common general expenses, often you find yourself paying for various other recurring and one time expenses. These have to be considered as well and some of these are:
- Vehicle tax, insurance and maintenance costs
- Apartment deposit
- Furniture and appliances
- Driving license
- TV steaming services