Germany Taxes in 2026: Everything You Need to Know, in One Page

Last reviewed: November 2026 · Reviewed by Stéphane Gombauld, tax expert, technologist and digital nomad

You're moving to Germany, already living there, or planning your exit. This page gives you the whole German tax system in one view: who pays, how much, and which rules bite when you arrive or leave. Each section points to a deeper guide.

Germany taxes in 2026: the key figures

Is this guide for you?

Read on if you…

• are moving to Germany for a job, a freelance contract or a partner
• already live in Germany and want the full picture before a big decision
• run, or plan to run, a business with German clients or German co-founders

Probably not your case if you…

• only visit Germany for short trips and keep no home there
• need a line-by-line walkthrough of the German tax return form

How does the German tax system work?

Germany taxes on a residence basis. If you are resident, Germany taxes your worldwide income. If you're not, it only taxes income from German sources, such as German rent or work done in Germany.

Who counts as a German tax resident?

Section 1 of the Income Tax Act (EStG) makes you unlimited taxable – taxable on everything. You only need to meet one of two tests:

1. Residence (Wohnsitz, §8 Fiscal Code) – a home you keep and can use. A rented flat you return to is enough. Nationality and registration don't decide it.
2. Habitual abode (gewöhnlicher Aufenthalt, §9 Fiscal Code) – you stay in Germany for more than six months in a row. The stay can straddle two calendar years, and short trips out don't break it.

Here's the catch: the home test bites from day one. Sign a lease in Berlin and move in, and you are resident immediately. If another country also treats you as resident, the double tax treaty's tie-breaker decides. It looks at your permanent home first, then your centre of vital interests – basically where your life is.

The full move-in checklist is in our guide to obtaining tax residency in Germany.

The practical basics

• Tax year: the calendar year.
• Tax ID (Steuer-ID): sent by post after you register your address. It stays with you for life.
• Filing: self-employed people must file every year. Employees are often covered by payroll withholding, but must file in many cases, for example with foreign income.
• Deadline: 31 July of the following year if you file yourself; later with a tax adviser.
• Couples: married couples can file jointly and use income splitting, which often lowers the total bill.

What are the main taxes in Germany?

Income tax

German income tax is progressive. The rate climbs smoothly instead of jumping in steps.

On top comes the solidarity surcharge, but only for higher earners. Members of a registered church also pay church tax: 8% of income tax in Bavaria and Baden-Württemberg, 9% elsewhere.

Social security

Employees and employers split contributions for pension, health, unemployment and long-term care. The employee share is roughly 21% of gross salary, capped at annual ceilings. Freelancers usually have no compulsory pension insurance, with exceptions for some professions. Health insurance is compulsory for everyone.

Capital gains and investment income

Interest, dividends and gains on shares and funds pay a flat 25% Abgeltungsteuer (final withholding tax), plus Soli. The first EUR 1,000 per person is tax-free (Sparer-Pauschbetrag). Crypto is tax-free after one year of holding, and private property after ten. Full details in our guide to capital gains tax in Germany.

Corporate tax and trade tax

A German company (GmbH, UG, AG) pays 15% corporate tax plus Soli, so 15.825%. Municipal trade tax (Gewerbesteuer) comes on top. It equals 3.5% of profit times the local multiplier, which is at least 200%. In most cities the combined rate lands around 30%.

Good news for founders: a 2025 law cuts corporate tax by one point a year from 2028, reaching 10% in 2032. For 2026 and 2027, the rate stays at 15%.

VAT

The standard VAT rate is 19%, the reduced rate 7% (food, books, some services). Small businesses can skip charging VAT under the Kleinunternehmer rule: turnover of no more than EUR 25,000 last year and EUR 100,000 this year.

Inheritance, gift and wealth taxes

Germany has no wealth tax. It does tax inheritances and gifts at 7% to 50%, depending on the relationship and the amount. A spouse gets a EUR 500,000 allowance, each child EUR 400,000, and unrelated people EUR 20,000.

Are there special tax regimes for newcomers in Germany?

Honestly? Not really. Germany has no flat-rate regime for new residents, unlike Italy or Greece. Everyone pays the same progressive rates.

What you can use:

• Treaty exemptions with progression – foreign income that a treaty exempts stays tax-free, but it pushes up the rate on your German income.
• Moving costs – job-related relocation costs are deductible.
• The small-business VAT exemption – useful in your first freelance year.
• Allowances – the EUR 1,000 investment allowance and the EUR 12,348 basic allowance apply to everyone.

We cover the details in tax incentives for expats and digital nomads in Germany.

What happens when you move to or leave Germany?

Moving in

You register your address (Anmeldung) within two weeks of moving in. Your tax ID follows by post. If you're self-employed, you register with the tax office through the ELSTER portal within one month of starting. Income you earned abroad before the move is not taxed, but it can raise your German rate for the year.

Moving out

Deregistering (Abmeldung) is required, but it doesn't end your residency on its own. You must give up every home available to you and stop staying in Germany for more than six months at a stretch. Two rules deserve attention before you go:

• Exit tax (§6 Foreign Tax Act, AStG) – do you hold 1% or more of a company? Were you resident for at least 7 of the last 12 years? Then Germany taxes the unrealised gain when you leave. Since 2022 you can pay in seven annual instalments on application. If you return within seven years, the tax lapses.
• Extended limited tax liability (§2 AStG) – German citizens who move to a low-tax country can stay taxable on more German income. It applies if they keep substantial German interests, for up to ten years.

Our guide to ceasing your tax residency in Germany walks you through the full exit plan. Comparing neighbours? See how tax residency in Austria works.

How is a business taxed in Germany?

It depends on the structure you pick.

• Sole proprietor (Einzelunternehmen) – profit is taxed at your personal rate. Commercial businesses also pay trade tax above a EUR 24,500 allowance, but most of it is credited against income tax.
• Liberal professional (Freiberufler) – listed professions such as translators, journalists, engineers and some IT consultants pay no trade tax at all.
• GmbH or UG – about 30% on profits, then 26.375% when you pay out dividends. Worth it mainly when you reinvest profit.

Not sure which fits? Our guide to legal forms of business in Germany compares them side by side.

Common mistakes (and what they cost)

• Keeping a flat "just in case" after leaving → you stay fully taxable in Germany on your worldwide income.
• Assuming Abmeldung ends your residency → the tax office looks at facts, so you can owe tax for years you thought were over.
• Ignoring the exit tax on your company shares → a five- or six-figure tax bill with no sale and no cash.
• Not filing in your arrival year → foreign income used for the rate calculation still requires a return; missing it triggers late-filing surcharges.
• Choosing a GmbH too early → you pay setup and accounting costs without saving tax, because you take all profit out anyway.

Frequently asked questions

Does Germany tax worldwide income?

Yes, if you are resident. Having a home in Germany, or staying there more than six months, makes you fully taxable on income from anywhere. Double tax treaties then decide which country may tax each type of income. Germany usually exempts treaty-protected foreign income but uses it to set your rate. Non-residents pay German tax only on German-source income.

What is the highest income tax rate in Germany in 2026?

The top rate is 45%, from EUR 277,826 of taxable income for a single person. Most professionals hit the 42% rate first, which starts at EUR 69,879. Add the 5.5% solidarity surcharge for higher earners and church tax if you're a member. Your average rate is always well below your top marginal rate.

Does Germany have a wealth tax?

No. Germany has not levied a wealth tax since 1997. It does tax inheritances and gifts at 7% to 50%, with generous allowances for spouses and children. German citizens who move abroad stay exposed to German inheritance tax for five years. Plan gifts and estates with that window in mind.

How much tax does a company pay in Germany?

A GmbH or UG pays 15% corporate tax plus a 5.5% surcharge on it, so 15.825%. Trade tax adds about 7% to 20%, depending on the municipality. The combined rate is usually around 30%. Dividends to you then pay 26.375%. From 2028, corporate tax falls by one point each year to 10% by 2032.

Is there a special tax regime for expats in Germany?

No. Germany has no flat tax or non-dom style regime for newcomers. You pay the normal progressive rates from day one. You can still deduct relocation costs, use treaty exemptions, and benefit from the small-business VAT exemption if your turnover is low. Careful planning of your arrival date can also lower your first-year rate.

When do I have to file my German tax return?

For tax year 2026, the deadline is 31 July 2027 if you file yourself. With a tax adviser, you get substantially more time. Self-employed people must always file. Employees must file in many situations, for example with foreign income above EUR 410 that affects their rate, or with two jobs.

Germany tax guides

• Practical guide to obtaining your tax residency in Germany – the residence tests, Anmeldung, tax ID and your first-year timeline.
• Practical guide to ceasing your tax residency in Germany – Abmeldung, exit tax and what stays taxable after you leave.
• Capital gains tax in Germany – rates on shares, funds, crypto and property, plus legal ways to pay less.
• Legal forms of business in Germany – GmbH, UG, GbR, sole proprietor and Freiberufler compared.
• Tax incentives for expats and digital nomads in Germany – deductions and reliefs you can actually use.

Related guides

• How to become a tax resident in Germany
• How to leave Germany and end your tax residency
• Capital gains tax rates in Germany for 2026
• Choosing a business structure in Germany
• How to obtain tax residency in Austria
• All country tax guides

Sources

• Income Tax Act (EStG) – §§1, 2, 20, 23, 32a
• Fiscal Code (AO) – §§8, 9
• Foreign Tax Act (AStG) – §§2, 6
• Corporate Income Tax Act (KStG)
• Trade Tax Act (GewStG)
• Federal Ministry of Finance (Bundesfinanzministerium)
• Federal Central Tax Office (BZSt) – tax identification number
• Make it in Germany – official portal for skilled workers

This guide is general information, not personalised tax advice. See how we research and review.