Banking, Money and Taxes in Germany

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Expats shouldn't have trouble handling their banking, money and taxes in GermanyExpats will find the systems of banking, money and taxes in Germany easy to negotiate despite their sophistication.

Once they get a residence card, opening a bank account is fairly straightforward. Everyday transactions are simple since online banking is a standard feature and credit cards can be used at most outlets. 

And in most cases, filing their tax returns shouldn't be much of a headache either.


Money in Germany

The official currency in Germany is the Euro (EUR), with 1 EUR divided into 100 cents.

  • Notes: 5, 10, 20, 50, 100, 200 and 500 EUR
  • Coins: 1, 2, 5, 10 and 20 cents, and 1 and 2 EUR
Most debit and credit cards are accepted in Germany. ATMs can be found nearly everywhere and generally offer good exchange rates (there are transaction charges for international card use that can quickly add up). 
Otherwise, expats can exchange cash at bank branches, bureau de change and even post offices – which surprisingly offer some of the best rates.

Banking in Germany

The major banks are Westdeutsche Landesbank, Bayerische Vereinsbank, PostBank, Commerzbank and Deutsche Bank. Many international banks have branches in Germany and continuing an overseas account is sometimes the best option for an expat.

Opening a bank account in Germany

Opening a bank account in Germany is easy and online banking is commonly used to make transactions and manage accounts. Expats opening an account will need to provide their residence card, proof of address and a passport.

To open an account immediately, expats will need to bring a nominal amount of cash. Alternatively, funds can be transferred from overseas but this may take a few weeks.

ATMs and credit cards

Once someone opens an account the bank issues them Eurocard (EC) which can be used to withdraw cash, print out bank statements from ATMs (Geldautomat) and make purchases. But expats should note that withdrawing money from another bank's ATM will incur extra charges.
They can also establish a line of credit at a German bank, usually two or three times their monthly pay. Once they've done this they could overdraw on their account to the agreed amount – but overdrafts can come with heavy interest.

Taxes in Germany

Expats will have to pay tax on income derived from German sources. Higher earners pay much more tax than those on lower salaries.

Taxes are generally automatically deducted from an employee's pay cheque by their employers. As is the case in most European countries, workers are taxed throughout the year and adjustments are made for possible under- or over-payments at the end of the year.

The rate of income tax increases progressively from zero percent to 45 percent. A solidarity surcharge (5.5 percent of income tax) also has to be paid. No income tax is charged on basic allowances.

Value-added tax (VAT) is 19 percent, with reduced rates on some foods and transport services. Medical and insurance services, and export of goods and services are mostly exempt from VAT. Additional sales taxes are payable on a number of products including alcohol, tobacco, tea, coffee and gasoline.

Expat must get a tax card when they start working in Germany. Self-employed people must complete a tax return at the end of each tax year.

Germany has double taxation treaties with most of the countries expats tend to come from, but all expats are required to complete an annual tax return regardless of whether they are formally employed or do freelance work. 

*Information of tax allowances and rates change regularly so expats are advised to check with the authorities for the latest information

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