I just got married in Germany. How does this affect my taxes?
If you're a German resident and just tied the knot, here's an overview of what to expect for the coming tax year.
Maybe you just tied the knot (congratulations!) and are wondering about how to go about filing taxes. Or maybe you're moving to Germany as a married couple and wondering what this means for you.
The first step is to change (or choose) your tax class.
In Germany, married couples - and those in registered domestic partnerships - have the option to decide between different tax classes, and whether they submit a return individually (Einzelveranlagung) or together (Zusammenveranlagung). You can only change your tax class once a year, and the date you were married counts for the entire year.
So even if wedding bells sounded on December 31st, 2022, your new tax status still applies for all of 2022.
There are three main classes which you can choose - or change to if you've previously submitted a tax return as a single person in Germany.
Tax Classes 3 and 5 (Joint assessment): This is the system that allows couples to combine their incomes for tax purposes. It is particularly beneficial if one spouse has a significantly higher income than the other.
The higher earner selects Class 3 (lower tax rate), while the lower earner takes Class 5 (higher tax rate). The total income is added up and divided in two, with the joint income being taxed. Also dubbed Ehegattensplitting ("spousal splitting"), critics argue the practice de-incentivises the lower earner to work or pushes them to work less so that the overall taxable income will be lower once the tax office 'splits' it.
READ ALSO: Ehegattensplitting: How did Germany's marriage tax law become so controversial?
Tax Class combination 4 and 4: This is the default option if you don't choose any other class, meaning that both partners are assigned Class 4. Both partners are taxed individually, making it ideal for pairs with similar incomes.
Tax Class 4 and 4 with "Factor": Available since 2010, this combo is similar to 4/4, but the tax office considers additional factors, such as possible deductions, which can result in a more accurate refund.
Once you decide on your preferred tax classes, you'll need to inform your local Steueramt, or tax office. You can do this by filling out a "change of tax class" (Antrag auf Steuerklassenwechsel bei Ehegatten/Lebenspartnern) application or simply do it via the Elster online portal (yes, some things in Germany are possible without paper).
ELSTER the online portal for submitting tax returns in Germany. Photo: picture alliance/dpa/dpa-tmn | Christin Klose
However, it's essential to do this promptly to ensure your withholding tax from your employer is accurate throughout the year.
Take advantage of deductions and allowances
As a married couple, you may be eligible for specific deductions and allowances. These can include:
Child benefits and tax credits: Married couples and registered partners with children may be eligible for various child-related benefits, such as Kindergeld (child benefit) and Kinderfreibetrag (child allowance), which are also available to single parents and those who are aren't married. These benefits can reduce taxable income.
READ ALSO: Which benefits are you entitled to if you have children in Germany?
Inheritance tax exemptions: Inheritances between spouses in Germany are exempt from inheritance tax (Erbschaftssteuer) up to €500,000.
Gift tax exemptions: Gifts between spouses are typically exempt from gift tax (Schenkungssteuer).
Property transfer tax exemptions: Transferring property between spouses is often exempt from property transfer tax (Grunderwerbsteuer).
Pension splitting: In the case of divorce or separation, spouses may be able to split pension entitlements, which can have tax implications.
Homeownership deductions: If you own a home, there are deductions for mortgage interest and certain renovation costs.
Consider hiring a tax advisor
Consulting a tax advisor (Steuerberater) or professional association can help you maximise your tax benefits - some of them will ask married couples to submit their information, and suggest a tax class combination based on their situation. Plus you get over an extra year to file - music to the ears of those scrambling to meet this year's October 2nd deadline for those filing on their own.
READ ALSO: What you need to know about Germany's extended tax filing deadlines
Please note that this article is just intended as guidance and not considered professional tax advice. We recommend that you consult with a qualified tax advisor or authority for specific advice on your individual situation.
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Maybe you just tied the knot (congratulations!) and are wondering about how to go about filing taxes. Or maybe you're moving to Germany as a married couple and wondering what this means for you.
The first step is to change (or choose) your tax class.
In Germany, married couples - and those in registered domestic partnerships - have the option to decide between different tax classes, and whether they submit a return individually (Einzelveranlagung) or together (Zusammenveranlagung). You can only change your tax class once a year, and the date you were married counts for the entire year.
So even if wedding bells sounded on December 31st, 2022, your new tax status still applies for all of 2022.
There are three main classes which you can choose - or change to if you've previously submitted a tax return as a single person in Germany.
Tax Classes 3 and 5 (Joint assessment): This is the system that allows couples to combine their incomes for tax purposes. It is particularly beneficial if one spouse has a significantly higher income than the other.
The higher earner selects Class 3 (lower tax rate), while the lower earner takes Class 5 (higher tax rate). The total income is added up and divided in two, with the joint income being taxed. Also dubbed Ehegattensplitting ("spousal splitting"), critics argue the practice de-incentivises the lower earner to work or pushes them to work less so that the overall taxable income will be lower once the tax office 'splits' it.
READ ALSO: Ehegattensplitting: How did Germany's marriage tax law become so controversial?
Tax Class combination 4 and 4: This is the default option if you don't choose any other class, meaning that both partners are assigned Class 4. Both partners are taxed individually, making it ideal for pairs with similar incomes.
Tax Class 4 and 4 with "Factor": Available since 2010, this combo is similar to 4/4, but the tax office considers additional factors, such as possible deductions, which can result in a more accurate refund.
Once you decide on your preferred tax classes, you'll need to inform your local Steueramt, or tax office. You can do this by filling out a "change of tax class" (Antrag auf Steuerklassenwechsel bei Ehegatten/Lebenspartnern) application or simply do it via the Elster online portal (yes, some things in Germany are possible without paper).
However, it's essential to do this promptly to ensure your withholding tax from your employer is accurate throughout the year.
Take advantage of deductions and allowances
As a married couple, you may be eligible for specific deductions and allowances. These can include:
Child benefits and tax credits: Married couples and registered partners with children may be eligible for various child-related benefits, such as Kindergeld (child benefit) and Kinderfreibetrag (child allowance), which are also available to single parents and those who are aren't married. These benefits can reduce taxable income.
READ ALSO: Which benefits are you entitled to if you have children in Germany?
Inheritance tax exemptions: Inheritances between spouses in Germany are exempt from inheritance tax (Erbschaftssteuer) up to €500,000.
Gift tax exemptions: Gifts between spouses are typically exempt from gift tax (Schenkungssteuer).
Property transfer tax exemptions: Transferring property between spouses is often exempt from property transfer tax (Grunderwerbsteuer).
Pension splitting: In the case of divorce or separation, spouses may be able to split pension entitlements, which can have tax implications.
Homeownership deductions: If you own a home, there are deductions for mortgage interest and certain renovation costs.
Consider hiring a tax advisor
Consulting a tax advisor (Steuerberater) or professional association can help you maximise your tax benefits - some of them will ask married couples to submit their information, and suggest a tax class combination based on their situation. Plus you get over an extra year to file - music to the ears of those scrambling to meet this year's October 2nd deadline for those filing on their own.
READ ALSO: What you need to know about Germany's extended tax filing deadlines
Please note that this article is just intended as guidance and not considered professional tax advice. We recommend that you consult with a qualified tax advisor or authority for specific advice on your individual situation.
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