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Germany - Overview and introduction

Germany - Overview and introduction

Taxation of international executives

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Berlin skyline with Spree river at sunset, Germany

The German taxation scheme for individuals is composed of an income tax, a solidarity surcharge, and where applicable, church tax. Individuals residing in Germany are subject to tax on their worldwide income unless exempt under the provisions of a tax treaty. This is known as the concept of unlimited tax liability. The social insurance system provides for pension insurance, unemployment insurance, health and nursing insurance as well as accident insurance and covers all employees working in Germany. Exemption may be granted under the applicable European Union (EU) regulations or a totalization agreement.

The maximum tax rate in Germany is 45 percent plus a solidarity surcharge of 5.5 percent of the income tax. In addition, the individual may be liable to pay church tax at 8 or 9 percent of the income tax.

Non-residents are subject to tax on certain categories of income from German sources under the concept of limited tax liability.

The official currency of Germany is the Euro (EUR).

Herein, the host country refers to the country to which the employee is assigned. The home country refers to the country where the assignee lives when they are not on assignment.

Disclaimer

All information contained in this publication is summarized by KPMG AG Wirtschaftsprüfungsgesellschaft, the German member firm affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity, based on the German Income Tax Law 2019 (§§ 1, 2, 3, 8, 9, 9a, 10, 10b, 10c, 17, 19, 20, 23, 32, 32a, 32b, 32d, 33a, 37, 38, 39b, 49, 50 EStG); Abgabenordenung (§§ 8, 9, 149, 152, 233a, 238, 240 AO); Bundesumzugskostengesetz (BUKG), Auslandsumzugskostenverordnung (AUV), Bundesversicherungsanstalt für Angestellte (BfA); Inheritance and Gift Tax Act (§ 19 ErbStG); Debatin/Wassermeyer, Doppelbesteuerung, Kommentar, Stand October 2019; 147 EL) Guidance issued by the Federal Ministry of Finance on Taxation of Employment Income According to the Double Tax Treaties on 03 May 2018).

Copyright

© 2020 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.

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