Understanding the German Tax System: A Student’s Quick Guide
Understanding the German Tax System: A Student’s Quick Guide Navigating taxes in Germany might seem overwhelming at first. Whether you’re a student, a resident, or a newcomer, this guide explains the basics—from why your net salary looks so different from your gross income to how to legally reduce your tax burden. 1. The Big Questions Why does my salary shrink after deductions? Hint: It’s not only income tax—social contributions also play a significant role. What’s the difference between income tax and social contributions? Note: Income tax funds public services (education, infrastructure, etc.), while social contributions cover benefits like pension and health insurance. How can I legally reduce my tax burden? Filing a tax return (Steuererklärung) may help you reclaim overpaid taxes by deducting eligible expenses. 2. Tax Classes in Germany Germany uses six tax classes that determine the month...