Banking & Taxes
- Wages and salaries are generally transferred directly to a current account. You should therefore open a current account at a bank before you start working.
- Forward your banking details to your employer so that your wages can be transferred to your bank account.
- Most shops accept EC cards, make sure however always to carry some cash with you in case cards are not accepted. The use of credit cards is not as widely accepted here as in other countries.
- Compare the conditions and costs involved before chosing to open an account with a bank.
- You must file a German income tax return with the local tax authorities after the end of the tax year (= end of calendar year).
- Germany does not have a special tax regime for incoming expats. You may also be liable for taxes in your home country.
- Church tax is automatically deducted from your gross salary unless you declare that you are not affiliated with one of Germany´s established churches, Catholic and Protestant.
- The value-added tax in Germany is 19 %, there is a reduced rate of 7 % for food, agricultural products, transport and printed material.
In Munich, there is an extensive network of banks, about 160 banks offer their financial services including numerous foreign banks. Many financial transactions in Germany take place without using any cash.
Types of bank accounts:
- Current account (Girokonto)
- Instant access savings account (Tagesgeldkonto)
- Limited access savings account (Sparkonto)
- Securities account (Depot)
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?
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)
- a salary statement from your employer (depending on the account type)
- some banks also ask for your work permit
NOTE: If you prefer in-person service or require some advice before opening an account you have a local branch to speak to. It is advisable to make an appointment for the opening of your bank account at the bank of your choice.
Opening a bank account online:
The process of opening a bank account online is roughly the same for all banks:
Step 1: Go to the website of your chosen bank and find the appropriate form for "Privatkunden Girokonto-Eröffnung".
Step 2: Fill out the form. You will be able to select a few options (such as option for overdraft, option for credit card).
Step 3: Check the completed form and print it for your records.
Step 4: Take the application form, the Postident form, 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.
Your employer will automatically transfer the net amount of your income to your bank account.
This means that your employer has already deducted contributions to cover pension insurance, health insurance, unemployment insurance and long-term 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 done your residence registration.
The taxation on employment income is carried out based on your taxation class which is based on your personal status.
NOTE: Check the taxation class on your first paycheck. Married couples automatically fall into class IV if not stated otherwise. 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 information
Types of taxes
- wage/salary tax
- income tax
- value-added tax
- church tax
- property tax
- motor vehicle tax
NOTE: It is important to check the tax assessment note you receive from your local tax office after having filed your tax return within a one month time frame. If you have a German tax advisor you should forward this note to your advisor so that he/she can check it for you.
Tax allowance for children
Expenditure on child support and on childrens' vocational training is taken into account with a special tax allowance, with allowances for costs on child supervision, education and training and with child benefit payments.
Married couples can apply for joint assessment to be taxed at a more favorable rate.
LMU Gateway is here to support you with questions you may have related to banking and taxes. We can help you with queries such as:
- How do I open a bank account in Germany?
- What types of bank accounts are available?
- Can I withdraw money from all ATMs with my EC card?
- How do I transfer money in Germany or abroad?
- How do I find a tax advisor in Munich?
- Do I automatically have to pay church tax in Germany?
- Do I also need to pay taxes for my pets in Germany?
Please contact us at LMU Gateway for more information. In addition, feel free to ask for a list of specific vocabulary (German and English) containing the most important terms in this field.
Germany's Banking System:
- Make-it-in-Germany (Money and banking)
- BAMF (Banks and insurance companies)
- Work in Bavaria (Money and banks)
- FPMI (How to find a bank)
Germany's Taxation System:
- EURAXESS (Taxation)
- DStV (German association of tax advisers)
- Make-it-in-Germany (Taxes in Germany)
- BZSt (Income tax)