Changing The Tax Class In Germany

Changing The Tax Class In Germany

We all are aware of the fact that taxes are significant in Germany. There are a lot of elements that will impact your income tax rate in Germany. None of the elements are more critical than your tax class. Here in this article, we will learn about the tax classes in Germany in detail and try to understand their importance. If you think your current tax class is irrelevant to your situation, then we will get to know the process of changing the tax class in Germany.

Table of Contents

Tax Classes In Germany

In Germany, the tax class is defined by the citizen’s marital status. Based on that, you will be put in different categories by the Finanzamt. With the help of these categories, your employer can apply the correct tax rate on your pay slip. The payslip is known as “Lohnsteuerklasse” in Germany. This impacts how much income tax, solidarity contribution, and church tax will deduct from your gross salary. In simple words, we can say that your net salary is directly related to your tax class in Germany. The tax class is only relevant to the employees. Self-employed are paying income tax through sources.

Let’s have a look at tax classes in Germany.

Tax Class   Description
I Single, widowed, civil partnership, divorced, spouse living abroad, or legally separated.
II Single parents.
III Recently widowed or married with a significantly larger income than the spouse. Both work in Germany.
IV Married, both spouses have a similar income.
V Married with a significantly smaller income than the spouse.
VI Workers with multiple employment.

Married People Can Save Money

You have seen in the table of tax classes that married people can belong to different categories and optimize differently. You should be aware that the Finanzamt will put both partners in tax class four. This happens once you register your marriage in Germany. However, this is not an excellent solution for most households. In simple words, the German tax system knows that the higher-earner household typically bears more of the household’s costs. Here the idea applies, which allows for a tax rebate when one of the partners earns less than the other. That’s how moving from tax class 4 to tax class 3/5 might increase the net salary for the higher earner. That’s why married partners can save money on income tax.

When to Change the Tax Class?

You can change the tax class if you think your tax class is not correct for you. To do this, the higher earner in the household has to earn a good deal more for this. The higher earner supposes to make at least 60% of the total household income. The employees can calculate how the tax classes impact their net income with the help of the German salary calculator.

The combination of the tax classes 3 and 5 is only possible for married couples in case both spouses live in Germany. If your partner is still in your home country and waiting for their visa. In that scenario, you will be placed in tax class 1, and you will need to apply for a tax class change. You can do this once your spouse registers in Germany.

You can also change the tax class when your family circumstances change fundamentally. In the scenario of divorce and marriage in Germany, the information is automatically communicated by the registry office to the financial authorities. There are other reasons too, and you have to report such changes to the tax office by the due date. The due date is November 30th. Following this, your new tax class will become effective the following month.

Here, look at the following reasons for a change in the tax class.

  • Marriage can change to tax class number 4.
  • Separation and divorce will change to tax class number 1 if you don’t have children and children without full custody. The tax class 2 will apply when you are a single parent and have sole custody.
  • If you have the birth of a child and you will have sole custody, then change to tax class number 2.
  • The death of a spouse will change the tax class number 3 in the first two years after the death. After two years, the tax class will change to 1 or 2.

How to Change the Tax Class in Germany?

In Germany, foreigners can choose the tax class change. The tax class change will occur in the month when the request was submitted. Then you can see a difference in your coming net salary. If both partners are employees and the income is taxable. You should have been through a tax class change in Germany. 

There are two ways to change tax class in Germany.

  • Offline Tax Class Change Request With A Form

The tax class changing process in Germany is elementary:

  • Online Tax Class Change Request With Elster
    • Log in with your Elster account and head to the form.
    • Select the year for which this should take place. You can select the current year if the application is sent before the last day of November.
    • The first page is your personal details.
    • The Second page is your partner’s details.
    • Lgnore the third page if you do this application yourself. This is meant for tax consultants.
    • The fourth page states your current tax class combination and which one you want to switch to.

In a Nutshell

In Germany, your marital status determines your tax class. You can choose your tax class only after getting married. The income of both spouses determines whether a tax class change is required to receive a temporary tax advantage on your monthly payment. You should be aware that the amount of income tax per year remains identical. To get more information about taxation in Germany please refer to our previous articles.

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