Tax Obligations in Germany

Tax is the main ingredient in running governments. Without tax, nothing works. Nothing would run.

If you are going to leave your country and go to live and work in Germany, expect to pay your taxes. 

Germany offers great job opportunities, world-class education, and a high quality of life. But along with these benefits comes a responsibility that many newcomers find confusing: paying taxes in Germany.

Germany has one of the most structured tax systems in the world. If you live and work in Germany, you are legally required to pay taxes — regardless of your nationality.

This guide explains the German tax system in simple English so that you understand your obligations, avoid common mistakes, and make the most of your money.

💡 Key Insight: Understanding your tax obligations from day one can save you money and protect you from legal trouble. This guide was written specifically for African expatriates navigating the German system.

1. Who Has to Pay Taxes in Germany?

The first thing to understand is who Germany considers a ‘taxable person.’ The answer is based on where you live, not where you are from.

Tax Residency Rules

According to the German Federal Ministry of Finance, you are considered a tax resident in Germany if you meet either of these conditions:

• You have a permanent home (Wohnsitz) in Germany. This means you have a registered address where you live.
• You spend more than 183 days a year in Germany — even if you do not have a permanent address.

If you are a tax resident, Germany taxes your worldwide income — this means any money you earn anywhere in the world, including income from your home country in Africa.

If you are not a resident but earn income in Germany (for example, from a German client or employer), you still pay taxes in Germany — but only on income earned in Germany. This is called limited tax liability.

📌 Practical Note: As soon as you register your address (Anmeldung) at the local registration office (Einwohnermeldeamt), you are automatically considered a tax resident.

2. The German Tax System: An Overview

Germany uses a pay-as-you-earn system for most workers. This means your employer deducts taxes from your salary before you receive it. However, you may also need to file a tax return each year depending on your situation.

Main Types of Taxes You Will Encounter

a) Income Tax (Einkommensteuer)

This is the main tax most people pay. It applies to your salary, freelance income, rental income, and investments. Germany uses a progressive tax system, which means the more you earn, the higher the percentage you pay. Tax rates in 2025 range from 0% to 45%, according to the German Income Tax Act (EStG).

• Income up to €12,096 per year → 0% (tax-free allowance)
• Income from €12,097 to €68,430 → 14% to 42%
• Income from €68,431 to €277,825 → 42%
• Income above €277,826 → 45%

b) Solidarity Surcharge (Solidaritätszuschlag)

This is a small additional charge on top of income tax. Since 2021, most taxpayers no longer pay this. It now only applies to very high earners (roughly those paying more than €18,130 in annual income tax). Read more at the Bundeszentralamt für Steuern.

c) Church Tax (Kirchensteuer)

If you are registered as a member of a church in Germany (such as Catholic or Protestant), you pay an extra 8–9% on top of your income tax. This is optional — you can formally leave the church (Kirchenaustritt) to stop paying it. Many African expatriates — especially those from non-affiliated denominations — are often unaware they are being charged this. Check with your local tax authority (Finanzamt) if you are unsure.

d) Value Added Tax (Mehrwertsteuer / VAT)

If you run a business in Germany, you must charge VAT on most goods and services. The standard rate is 19%, with a reduced rate of 7% for some items like food and books. Freelancers who earn less than €25,000 per year can apply for Kleinunternehmerregelung (small business rule) to avoid charging VAT. More details are on the German Tax Portal (ELSTER).

e) Trade Tax (Gewerbesteuer)

If you own a business (not just freelance), you may also need to pay trade tax. This varies by municipality (city or town) and usually ranges between 7% and 17%. The local Finanzamt can tell you the exact rate in your area.

3. Tax Classes (Steuerklassen): What Are They?

Germany assigns every employed worker to a tax class (Steuerklasse). Your tax class determines how much income tax is deducted from your salary each month. There are six classes:

• Class I – Single or divorced, no children.
• Class II – Single parent raising a child alone.
• Class III – Married with a lower-earning spouse.
• Class IV – Married with similar income to your spouse.
• Class V – Married, assigned when the spouse is in Class III.
• Class VI – For a second or additional job.

Most African expatriates who arrive as single workers start in Class I. If you get married while in Germany, you and your spouse may apply to change your classes to benefit from a better tax rate. You can change your tax class by contacting your local Finanzamt.

⚠️ Important: Your tax class is not chosen by your employer. You must apply for the right class at the Finanzamt after registration.

4. The Tax Identification Number (Steuer-ID)

After you register your address in Germany, you will automatically receive a Tax Identification Number (Steuerliche Identifikationsnummer), also known as Steuer-ID. This is a unique 11-digit number that stays with you for life in Germany.

You need your Steuer-ID to:

• Start a new job (your employer needs it to pay your salary correctly)
• File your tax return
• Open a bank account in some cases
• Apply for benefits like Kindergeld (child benefit)

If you do not receive your Steuer-ID within 6 weeks of registering, you can request it from the Bundeszentralamt für Steuern (BZSt).

5. Filing Your Tax Return (Steuererklärung)

The tax return is a form you submit to the Finanzamt showing your total income and expenses for the year. Not everyone is required to file — but it is often worth doing so because many people receive a refund.

Who Must File?

• Freelancers and self-employed workers
• People with more than one employer
• Those who received income from abroad
• People who received more than €410 in severance payments or bonuses
• Married couples in Class III/V combination

Who Should File (Even If Not Required)?

Even if it is not required, filing a tax return is highly recommended if you:

• Had high work-related expenses (tools, travel, home office)
• Paid for further education or training
• Had medical or dental costs not covered by insurance
• Made donations to charity

The average German tax refund was around €1,095 per person in recent years, according to the Stiftung Warentest. It pays to file!

How to File

You can file your German tax return in several ways:

• ELSTER (Online Portal): The official free tool from the German tax authorities. Available at elster.de.
• Tax software: Programs like WISO Steuer, TaxFix, or Smartsteuer (many available in English).
• Tax advisor (Steuerberater): A professional who can help you maximize your refund. You can find one at datev.de.

The deadline for filing is usually July 31 of the following year. If you use a tax advisor, the deadline is extended to February 28/29 of the year after that.

💡 Tip for Africans in Germany: Many African professionals do not realize they can deduct costs for sending money home (in some limited cases), professional subscriptions, or the cost of looking for a new job. Keep all receipts throughout the year.

6. Double Taxation: Do You Pay Tax Twice?

A major concern for many African expatriates is: “Will I be taxed in Germany AND in my home country at the same time?”

Germany has signed Double Taxation Agreements (DTAs) with many African countries. These agreements ensure that you do not pay full tax in both countries on the same income. Countries with DTAs with Germany include:

• Kenya – Treaty signed in 1980 (updated)
• South Africa – Treaty in force
• Egypt – Treaty in force
• Tunisia – Treaty in force
• Morocco – Treaty in force
• Zambia – Treaty in force

Countries such as Nigeria, Ghana, Ethiopia, Uganda, and several others do not yet have a formal DTA with Germany. In those cases, Germany may still give a tax credit for taxes paid abroad, but you should consult a tax advisor. You can check the full list of German DTAs at the German Federal Ministry of Finance.

7. Special Situations for African Expatriates

Sending Money Home (Remittances)

Germany does not tax the money you send to family abroad as remittances. However, large transfers may be flagged by banks under anti-money laundering rules. Always use registered transfer services like Western Union, Wise (TransferWise), or WorldRemit. Keep records of transfers in case your bank asks questions.

Working as a Freelancer or Self-Employed

Many Africans in Germany work as IT contractors, consultants, translators, tutors, or in the creative arts. If you are self-employed (freiberuflich) or running a business (gewerblich), your tax obligations are more complex. You must:

• Register your work at the Finanzamt
• Pay income tax on profits (not just income)
• File quarterly VAT returns if applicable
• Pay trade tax if you are classified as a business (Gewerbe)

Visit the Existenzgründungsportal for official guidance on starting a business in Germany as a foreigner.

Receiving Income from Africa

If you receive rent, dividends, salary, or any other income from your home country, you must declare this in your German tax return. Germany may tax this income (minus any credit for taxes already paid in Africa). Keep documentation such as bank statements and payment receipts from your home country.

Students and Part-Time Workers

If you are an African student in Germany and work part-time, you are still taxed on your German income. However, students benefit from the same €12,096 tax-free allowance. If you earn less than this annually, you will likely get all withheld tax back when you file a return.

8. Social Security Contributions: Not Taxes, But Still Important

Alongside income tax, you also pay social security contributions — these are automatically deducted from your salary along with income tax. They include:

• Health insurance (Krankenversicherung): 14.6% of gross salary, split between employer and employee.
• Pension insurance (Rentenversicherung): 18.6%, split equally.
• Unemployment insurance (Arbeitslosenversicherung): 2.6%, split equally.
• Long-term care insurance (Pflegeversicherung): 3.4%, split depending on age and children.

For more details, visit the Deutsche Rentenversicherung and the GKV Spitzenverband.

9. Common Mistakes African Expatriates Make

Here are the most common tax mistakes newcomers make — and how to avoid them:

• Not registering at the Finanzamt: Some people think registration at the Einwohnermeldeamt is enough. For self-employed work, you also need to register with the Finanzamt.
• Ignoring income from Africa: Any income earned abroad must be declared in Germany if you are a tax resident.
• Not deducting eligible expenses: Work-related travel, home office, professional tools, and language classes for work are all deductible.
• Missing the filing deadline: Late filings attract a 0.25% monthly surcharge on the unpaid tax amount.
• Paying church tax unnecessarily: If you are not affiliated with a German-registered church, you can opt out.
• Using the wrong tax class: Always check and update your tax class at the Finanzamt if your situation changes.

10. Where to Get Help

Navigating the German tax system does not have to be done alone. Here are key resources:

• ELSTER – Official Tax Filing Portal – Free online tax filing for individuals and businesses.
• Bundeszentralamt für Steuern (BZSt) – Federal Tax Office for identification numbers and international tax matters.
• Finanzamt Locator – Find your local tax office.
• Steuererklärung Guide (Federal Government) – Official guidance on filing tax returns.
• Make It in Germany (Official Government Portal) – Tax guide for immigrants.
• Lohnsteuer Hilfe (Volunteer Tax Help) – Low-cost tax advisory services.
• Finanztip – A well-respected German personal finance advice site with free tax guides.

Be Informed, Stay Compliant

The German tax system may seem complicated at first — but it is also fair and well-organized. Once you understand how it works, you can plan your finances better, claim all the deductions you deserve, and stay on the right side of the law.

As an African expatriate in Germany, you bring skills, ambition, and resilience. Adding tax knowledge to that list puts you in an even stronger position to thrive in your new home.

If you found this guide useful, share it with a fellow African in Germany. And remember: when in doubt, consult a qualified Steuerberater (tax advisor) — it is an investment that often pays for itself.

📬 Stay Connected: Follow kenyan-german-links.com for more practical guides on living and working in Germany as an African expatriate — from visa tips to banking, health insurance, job hunting, and beyond.