How to Change Tax Class in Germany: A Step-by-Step Guide for Foreigners
Changing your tax class (Steuerklasse) in Germany is essential for optimizing your tax payments, especially if your life circumstances change due to marriage, divorce, or having children. Here’s a complete guide tailored for foreigners on how to change your tax class.
What Are the Tax Classes in Germany?
Understanding the German tax classes (Steuerklassen) is the first step. There are six different tax classes in Germany, each impacting how much tax (Lohnsteuer) is withheld from your salary:
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Tax Class 1 (Steuerklasse 1): Single, Separated, Divorced, or Widowed
Steuerklasse 1 is designated for individuals who are unmarried or not in a recognized domestic partnership. This includes:
- 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).
This tax class applies the highest tax rates among all classes, making it less favorable compared to those designed for married couples.
Tax Class 2 (Steuerklasse 2): Single Parents Eligible for Child Benefits
Steuerklasse 2 is designed for single parents who are entitled to receive child benefits (Kindergeld) and have at least one dependent child living with them. To qualify:
- You must be unmarried, separated, divorced, or widowed.
- The child must live with you full-time, and you should not be cohabiting with a partner.
This tax class offers an additional tax relief known as the Entlastungsbetrag für Alleinerziehende (relief amount for single parents), which helps reduce the 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 used by married individuals or registered domestic partners who earn significantly more than their spouse. The spouse must be in Tax Class 5 for this combination to work. This setup is most beneficial when one partner has a much higher income than the other, as it provides lower tax rates for the higher earner. It’s also available for:
- Widowed individuals in the first year after their spouse’s death, allowing them to benefit from the more favorable tax rates during this period.
Steuerklasse 3 offers the lowest tax rate of all the classes, making it attractive for high-earning partners.
Tax Class 4 (Steuerklasse 4): Married Couples Earning Similar Incomes
Steuerklasse 4 is designed for married couples or registered partners where both earn roughly the same income. In this tax class:
- Each partner is taxed individually, but their combined income is taken into account, resulting in a middle-range tax rate.
This tax class is ideal for couples who want a balanced approach, avoiding the stark differences of Tax Class 3/5 combinations, which work best when there is a large income disparity between spouses.
Tax Class 5 (Steuerklasse 5): Married with a Spouse in Tax Class 3, Typically for Significant Income Differences
Steuerklasse 5 is the counterpart to Tax Class 3. It is typically chosen by the spouse with the lower income in a marriage, while the higher-earning spouse is in Tax Class 3. This setup leads to:
- The lower-income partner being taxed at a much higher rate than they would be in other tax classes.
While Tax Class 5 leads to higher deductions from the lower earner’s income, it can be beneficial overall if the spouse in Tax Class 3 earns much more and enjoys a lower tax rate. This class combination optimizes the family’s overall tax liability.
Tax Class 6 (Steuerklasse 6): For Individuals with More Than One Job
Steuerklasse 6 is reserved for individuals who have multiple jobs. If you earn income from more than one employer, the second (and any subsequent) job must be taxed under this class, regardless of your other tax class. It is important to note that:
- Tax Class 6 applies the highest tax rates of all the classes and offers no tax-free allowances.
- The first job is always taxed under your primary tax class (such as Tax Class 1 or Tax Class 4), while any additional jobs fall under Tax Class 6.
This tax class ensures that individuals with multiple income streams are taxed adequately, but it can result in significantly higher deductions.
When Should You Change Your Tax Class in Germany?
Here are the common situations where you should consider changing your tax class in Germany:
- After Marriage or Divorce: Adjust your tax class to reflect your new marital status.
- After the Birth of a Child: You may be eligible for Tax Class 2 if you’re a single parent.
- Income Changes: If you or your spouse’s income changes significantly, adjust your tax class accordingly.
- Starting a Second Job: If you take on a second job, you must use Tax Class 6 for your second income.
What Documents Are Required to Change Tax Class in Germany?
To change your tax class in Germany, you will 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
You can apply to change your tax class at your local Finanzamt (Tax Office). To find your nearest tax office, visit finanzamt.de. Knowing your Finanzamt’s contact details is essential before proceeding.
How to Change Your Tax Class in Germany: The Process
a) How to Change Your Tax Class Online in Germany
- Log into Elster: Germany’s online tax portal at elster.de.
- Register/Log In: Create an account if you are not registered. The process may take a few days as you’ll need a registration code via mail.
- Select the Option: In the main menu, find the form for changing tax classes (Antrag auf Steuerklassenwechsel).
- Complete the Form: Fill in your personal details, spouse details (if applicable), and reason for the change.
- Submit the Form: You will receive a confirmation email once the form is submitted.
b) How to Change Your Tax Class in Person at the Finanzamt
- Visit the Finanzamt: Book an appointment or visit your local Finanzamt without an appointment (though waiting times might be long).
- Submit the Form: Fill out the Steuerklassenwechsel form provided at the office.
- Get Confirmation: After submission, your tax class will be changed, and the new classification will take effect the following month.
How Long Does It Take to Change Your Tax Class in Germany?
After submitting your application, it usually takes a few weeks for the tax class change to be processed. You’ll see the change reflected in your payslip.
How to Verify Your New Tax Class on Your Payslip
Once your tax class is updated, review your Lohnabrechnung (payslip) to confirm the correct tax class is applied and that the right amount of tax is deducted.
Important Things to Remember When Changing Your Tax Class
- Changes take effect the following month: Once the application is processed, your new tax class will apply starting the next calendar month.
- Annual Tax Return Review: Changes in your tax class may affect your annual tax return (Steuererklärung), so review your tax situation annually to ensure you’re on track.
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.
