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Banking & Taxes

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Quick Facts:

For doctoral candidates with employment

  • Your salary is transferred directly to your bank account. You should therefore open a current account at a German bank before you start working.
  • As soon as your employment starts, you are enrolled in the German social security system, which includes pension, unemployment, accident, health and nursing care insurance.
  • Income taxes as well as social security contributions are automatically deducted from your gross salary. At the end of the month, you receive a pay slip detailing all deductions.
  • Germany has tax treaties with numerous countries to avoid double taxation. Ask your HR department or the relevant tax authority for more information.
  • You may file a tax return after the tax year to declare any work-related expenses, for which you may receive a tax refund.

For doctoral candidates with a scholarship

  • In general, you don’t need to pay German taxes on scholarships (if unsure, ask your scholarship provider)
  • You should check if you need to pay any taxes in your home country

General information

  • Compare the conditions and costs involved before choosing to open an account with a bank. Make sure that the bank of your choice has conveniently-located ATMs around the city.
  • Most shops accept EC cards. However, you should always carry some cash with you in case cards are not accepted. The use of credit cards is not as common here as in other countries.
  • The value-added tax in Germany is 19 %. For agricultural products, transport and printed material there is a reduced rate of 7 %. It is already included in the displayed price of a product/service.top

The Banking System

In Munich, there is an extensive network of commercial and savings banks operating on a local, national and international level. Most German banks offer different types of accounts, depending on the purpose.

Types of bank accounts

  • Current account (Girokonto)
  • Instant access savings account (Tagesgeldkonto)
  • Limited access savings account (Sparkonto)
  • Securities account (Depot)

If you are registered as a student at LMU, you may be eligible for a student account. Please inquire at the bank of your choice.

NOTE: Remember to read the terms and conditions to find out about all hidden costs of the account.

Questions you should ask yourself before opening a bank account:

  • Once I have opened the account, can I immediately withdraw money from the ATM?
  • Where can I withdraw money free of charge?
  • Can I set up standing orders and authorize direct debits?
  • Will I receive an EC card immediately?
  • What is the limit for cash withdrawals per day/week/month?
  • Will I get a credit card and what are the costs? When can I apply for the card and how long will it take to process?
  • What are the fees associated with my bank account?
  • Do I get an overdraft facility and what are the fees for this service?
  • Will my partner/spouse also have access to the account?
  • Is online banking available in English?

Opening a bank account in person

To open a bank account in Germany, you will need the following:

  • your passport
  • your proof of residence registration (Meldebescheinigung)
  • some banks also ask for your work permit
  • if you have student status: student ID or proof of registration

NOTE: If you prefer in-person service or require some advice before opening an account you can visit a local branch. It is advisable to make an appointment for the opening of your bank account.

Opening a bank account online

The process of opening a bank account online is roughly the same for all banks:

  1. Go to the website of your chosen bank and find the appropriate application form for "Privatkunden Girokonto-Eröffnung".
  2. Fill out the form. You will be able to select a few options (such as option for overdraft, option for credit card).
  3. Print the completed application form and the POSTIDENT coupon, which will be used to verify your identity at the post office. Some banks also offer an identity check via video call.
  4. Take the application form, the POSTIDENT coupon, your passport or identity card and your residence registration (Meldebescheinigung) to any post office (Deutsche Post). There, your identity will need to get confirmed. After this, please send the confirmation along with your account application to the chosen bank. You will then be informed by the bank whether your application has been successful.

Withdrawing cash and cashless payment

You can withdraw cash with your EC card by using your associated four-digit PIN code which will be sent to you by mail. You can also use your EC card for cashless payments.

NOTE: EC cards are generally more widely accepted in Germany than credit cards.

National and international transfers

For national and international money transfers you need the IBAN (International Bank Account Number) and BIC (Bank Identifier Code) of the account you are sending the money to.top

Taxes (Employment)

Your employer will automatically transfer the net amount of your income to your bank account.
This means that your employer has already deducted social security contributions to cover pension insurance, health insurance, unemployment insurance and nursing care insurance from your salary and paid these directly on your behalf.
In addition, income tax, the solidarity levy and church tax (if applicable) will already have been paid to the tax office.

Tax Identification Number

Every resident in Germany receives a Tax Identification Number. The tax office will send you this number automatically to your registered German address within about three weeks after you have completed your residence registration.

Taxation classes

The amount of your income tax not only depends on your salary, but also on your taxation class, which is based on your personal status.

NOTE: Check the taxation class on your first paycheck to make sure it is correct. Please communicate a change of taxation class as early as possible to your employer.

  • class I = single
  • class II = single parent (living alone with a child/children)
  • class III = married and spouse has no income or lower income
  • class IV = married and similar income to spouse
  • class V = opposite of class III, i.e. this is the class your spouse has, if you have III
  • class VI = for a second job or for deduction without proper employment informationtop

Useful Links

Germany's Banking System:

Germany's Taxation System:

 

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