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Taxes for Self-employees

Individuals living in Germany for six months, or longer, in any two-year period are considered residents for taxation purposes. As such, they are liable for tax on any German property they own and the income they earn in Germany and any other country. Individuals living in Germany for less than six months are only liable for tax on the income they earn in Germany.

How Much Tax Do You Pay?

Germany offers an annual tax free allowance of €8,354 for unmarried people. Thereafter, income tax starts at 14% and increases on a sliding scale to 45%, depending on how much you earn. A solidarity levy or surcharge (Solidaritätszuschlag), equivalent to 5.5% of your income tax, is also raised to fund the rebuilding of eastern Germany. Married couples can file a joint tax return, which typically reduces the overall amount of tax for which they are liable.

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Foreigners in Germany are not obliged to affiliate with a recognised faith but, if they do, they are liable for church tax (Kirchensteuer). Church tax is charged at 8% in the southern states of Bavaria and Baden-Württemberg and 9% in other parts of the country and is deducted automatically at source.

Tax Payments

Self-employees must apply to the German tax office for quarterly instalment payments, which are credited to their annual income tax bill and adjusted when a final income tax assessment for a complete financial year in available. Tax returns must be filed at the relevant tax office on, or before, May 31 of the year following the financial year to which they relate. If you are unclear about your rights and obligations as a German taxpayer, please refer to the tax office for detailed advice.

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