How to Change Tax Class in Germany: A Step-by-Step Guide for Foreigners
Changing your tax class (Steuerklasse) in Germany is crucial for optimizing your tax payments, especially if you experience life changes like marriage, divorce, or the birth of a child. For foreigners living in Germany, this guide will walk you through how to change your tax class in Germany and explain the steps you need to take.
What Are the Tax Classes in Germany?
Understanding the tax classes in Germany is essential when looking to change your tax class. There are six different tax classes in Germany, and each impacts the amount of tax withheld from your salary. Below is a breakdown of the German tax classes:
Tax Class 1 (Steuerklasse 1): Single, Separated, Divorced, or Widowed
Steuerklasse 1 is designated for individuals who are unmarried or not in a registered domestic partnership. This class applies to:
- Single people who have never been married.
- Divorced individuals who are no longer legally married.
- Separated spouses who no longer live together but are not officially divorced.
- Widowed individuals, but only after the first year of the spouse’s passing (before that, they may qualify for Steuerklasse 3).
Tax Class 1 typically has the highest tax rates, making it less favorable than classes designed for married couples.
Tax Class 2 (Steuerklasse 2): Single Parents Eligible for Child Benefits
Tax Class 2 is designed for single parents entitled to receive child benefits (Kindergeld). To qualify, you must be:
- Unmarried, separated, divorced, or widowed.
- The child must live with you full-time, and you cannot be living with a partner.
Steuerklasse 2 provides tax relief for single parents, known as the Entlastungsbetrag für Alleinerziehende, which helps reduce your overall tax burden.
Tax Class 3 (Steuerklasse 3): Married with a Spouse in Tax Class 5 or Unmarried Parents Living Together
Steuerklasse 3 is typically for married individuals or registered domestic partners where one spouse earns significantly more than the other. This class is beneficial for:
- High-earning partners whose spouse is in Tax Class 5.
- Widowed individuals in the first year after their spouse’s death.
Steuerklasse 3 offers lower tax rates and is considered the most favorable class for high earners.
Tax Class 4 (Steuerklasse 4): Married Couples Earning Similar Incomes
Steuerklasse 4 is suitable for married couples or registered partners who earn roughly the same income. This tax class applies a balanced tax rate and is ideal for couples who want an even tax distribution without the stark differences of the Tax Class 3/5 combination.
Tax Class 5 (Steuerklasse 5): Married with a Spouse in Tax Class 3
Steuerklasse 5 is the counterpart to Tax Class 3 and is typically chosen by the lower-earning spouse. It comes with higher tax deductions, but this setup can benefit couples where one spouse earns much more.
Tax Class 6 (Steuerklasse 6): For Individuals with More Than One Job
Steuerklasse 6 applies to individuals with multiple jobs. It is important to note that:
- The first job is taxed under your primary tax class (e.g., Tax Class 1 or 4).
- Any subsequent job must be taxed under Tax Class 6, which comes with higher tax rates and no tax-free allowances.
When Should You Change Your Tax Class in Germany?
Knowing when to change your tax class in Germany is vital to ensure you’re not overpaying taxes. Common situations include:
- After Marriage or Divorce: Adjust your tax class based on your new marital status.
- After the Birth of a Child: You may qualify for Tax Class 2 as a single parent.
- Income Changes: If your or your spouse’s income changes significantly, you may need to adjust your tax class.
- Starting a Second Job: If you take on a second job, you must use Tax Class 6 for your additional income.
Documents Required to Change Your Tax Class in Germany
To change your tax class, you’ll need the following documents:
- ID (Personalausweis) or passport (Reisepass).
- Marriage certificate (Heiratsurkunde), if applicable.
- Tax Identification Number (Steueridentifikationsnummer).
- Proof of address (Anmeldung).
Where to Apply to Change Your Tax Class
You can apply to change your tax class at your local Finanzamt (Tax Office). To find your nearest tax office, visit finanzamt.de. Having the right contact information is essential before you begin the process.
How to Change Your Tax Class in Germany: The Process
a) How to Change Tax Class Online in Germany
You can change your tax class online through the Elster portal. Here’s how:
- Log into Elster: Go to elster.de.
- Register or Log In: If you’re not already registered, create an account. This process can take a few days, as you’ll receive a registration code by mail.
- Select the Form: In the main menu, find the form for changing your tax class (Antrag auf Steuerklassenwechsel).
- Fill Out the Form: Enter your personal details, spouse’s details (if applicable), and the reason for the change.
- Submit the Form: Once submitted, you’ll receive a confirmation email.
b) How to Change Your Tax Class in Person at the Finanzamt
- Visit the Finanzamt: Book an appointment or visit the tax office in person.
- Submit the Form: Complete the Steuerklassenwechsel form provided at the office.
- Get Confirmation: After submission, your tax class will be updated, and the changes will take effect the following month.
How Long Does It Take to Change Your Tax Class in Germany?
After you submit your application, it typically takes a few weeks for the tax class change to be processed. The change will be reflected in your next payslip.
How to Verify Your New Tax Class on Your Payslip
Once the change is processed, check your Lohnabrechnung (payslip) to verify that the correct tax class has been applied and that the correct amount of tax is being deducted.
Important Things to Remember When Changing Your Tax Class
- Effective Date: The changes take effect the following month after your application is processed.
- Annual Tax Return: Changes in your tax class may affect your annual tax return (Steuererklärung). Review your tax situation annually to ensure you’re maximizing your benefits.
FAQ: Changing Tax Class in Germany
Can you change your tax class in Germany?
Yes, you can change your tax class in Germany. This is often done if your personal circumstances change, such as getting married, divorced, or if your income situation shifts. To change your tax class, you need to submit a request to your local tax office (Finanzamt).
Who decides the tax class in Germany?
The tax class in Germany is determined based on your personal circumstances, such as marital status, family situation, and income level. You can apply for a change through your local tax office (Finanzamt), which will process the request.
How to change tax class in Germany using Elster?
To change your tax class using ELSTER (the online tax portal), you will need to log in to your account and access the appropriate forms. Fill out the “Antrag auf Steuerklassenwechsel” (Application for Tax Class Change) and submit it electronically. Ensure you have all necessary information and documentation ready.
Which tax class pays the most in Germany?
Tax class 5 (Steuerklasse V) typically pays the most in terms of taxes because it is used for the lower-earning spouse in a marriage, resulting in higher tax deductions. In contrast, tax class 3 (Steuerklasse III) is more favorable for the higher earner.
How can I lower my taxes in Germany?
To lower your taxes in Germany, consider maximizing deductions for work-related expenses, health insurance, and contributions to retirement plans. Utilizing available allowances and consulting a tax advisor for tailored strategies can also help.
How do I correct my tax return in Germany?
To correct your tax return in Germany, you can submit an amended return (Berichtigte Steuererklärung) to your local tax office (Finanzamt). Clearly indicate the changes and provide any necessary documentation to support your corrections.
What tax class is a single person in Germany?
A single person in Germany is typically classified in tax class 1 (Steuerklasse I). This class is designed for unmarried individuals, divorced individuals, or widows/widowers without children, and it has standard tax rates.
Why is the tax so high in Germany?
Taxes in Germany are relatively high to fund extensive social services, including healthcare, education, and public infrastructure. The system is designed to provide a strong safety net, but this also results in higher tax burdens for individuals and businesses.
Who is exempt from taxes in Germany?
Certain individuals may be exempt from paying taxes in Germany, including low-income earners below the basic allowance (around €10,908 annually), students with limited income, and specific groups such as pensioners with low pensions.
Can I see my tax class in ELSTER?
Yes, you can see your tax class in your ELSTER account. After logging in, navigate to your profile or personal information section, where your tax class should be displayed.
What is ELSTER for?
ELSTER (Electronic Tax Declaration) is an online platform in Germany used for submitting tax returns, accessing tax-related information, and managing communication with the tax office. It simplifies the process of filing taxes electronically.
How to save tax in Germany for expats?
Expats in Germany can save taxes by utilizing tax deductions available for work-related expenses, health insurance, and retirement contributions. Additionally, understanding double taxation agreements between Germany and their home country can help reduce tax liabilities.
Which tax is refundable in Germany?
Income tax in Germany may be refundable if you have overpaid or if you qualify for deductions that reduce your taxable income. You can claim a refund by filing your annual tax return.
How can I avoid double taxation in Germany?
To avoid double taxation in Germany, you can benefit from double taxation agreements (DTAs) between Germany and your home country. This often allows you to claim tax credits or exemptions on income earned abroad. Consult a tax advisor to understand how these agreements apply to your situation.
