German Income Tax Guide (2025)

German Income Tax Guide

Overview & Navigation

Use this page to jump to the topic you need. Each chapter is a self-contained guide with examples, official links, and an interactive FAQ.

Quick jump: Core Concepts • Rates & Thresholds • Income Categories • Administration & Filing • Coordination with Swiss Tax • Deep-Dive Guides for Swiss Citizens

Core Concepts

Residency vs. Limited Tax Liability

When are you taxed on worldwide income vs. German-source only? AO §§8–9, EStG §1, §49–50, §1(3), §1a, treaty tie-breakers.

Rates & Thresholds

Basic Allowance (Grundfreibetrag)

Tax-free threshold, interaction with limited taxpayers and §1(3) option.

Income Tax Rates & Brackets

Progressive tariff, “Mittelzone” mechanics, splitting, examples.

Solidarity Surcharge & Church Tax

Who pays Soli today, church tax mechanics and exemptions.

Families & Children (Kindergeld)

Child benefits, allowances, cross-border coordination highlights.

Income Categories

Employment Income (§19)

Payroll withholding (ELStAM), €1,230 standard deduction, commuting & home-office rules.

Self-Employment (§18) vs. Trade/Business (§15)

EÜR vs. balance sheet, trade tax with €24,500 allowance, §35 EStG credit.

Capital Income (Abgeltungsteuer)

Flat tax, exemptions, German withholding and foreign tax credit basics.

Pensions & Other Income

Statutory pensions (cohort %), private annuities (Ertragsanteil), private disposals & crypto.

Administration & Filing

Filing Deadlines

Self-filed vs. advisor-filed timelines, voluntary returns (4-year window), late-filing surcharge & interest.

Coordination with Swiss Tax

Why this matters: Germany and Switzerland apply distinct residence tests and allocate taxing rights via the D-CH DTA (incl. Art. 15a Grenzgänger). Correct coordination avoids double taxation and mismatches (e.g., 4.5% Swiss commuter withholding, German assessment credits, pension treatment, bank interest/dividends).

Swiss Citizens Residing in Germany

Residence-based worldwide taxation, Art. 15a commuters to CH (4.5% Swiss withholding, 60 non-return days), FTC in German assessment.

Swiss Residents with German Income

Limited tax liability for German-source items, treaty allocation, German filings, and commuter rules to DE.