Banking, Money and Taxes in Germany

As with most things in Germany, the banking, money and tax systems are sophisticated and easy to navigate. Once you have a residence card, opening a bank account is fairly straightforward.

Everyday transactions are simple since online banking is a standard feature, and most outlets accept credit cards.

Money in Germany

The official currency in Germany is the Euro (EUR), with 1 EUR divided into 100 cents.

• Notes: 5 EUR, 10 EUR, 20 EUR, 50 EUR, 100 EUR, 200 EUR and 500 EUR
• Coins: 1 cent, 2 cents, 5 cents, 10 cents and 20 cents, and 1 EUR and 2 EUR

Banking in Germany

Germany has a well-established and respected banking sector. Some major local banks include Deutsche Bank, Commerzbank, and DZ Bank. Many international banks, including HSBC, Lloyds TSB, and Citibank, have branches in Germany. Continuing an overseas account through one of these is sometimes a good option for expats.

Opening a bank account

Opening a bank account in Germany is easy, and online banking is commonly used to make transactions and manage accounts. As a foreigner living in Germany, you must provide your residence card, proof of address, and a passport to open a bank account.

Some banks may also require you to provide your tax number (SteuerID), which you receive when you register your address. Although rare, some banks may also need you to provide a credit report from SCHUFA, Germany’s main credit bureau.

To open an account immediately, you must bring a nominal amount of cash. Alternatively, funds can be transferred from overseas, which may take a few weeks.

ATMs and credit cards

Once you open an account, the bank issues you a Eurocard (EC), which you can use to withdraw cash, print out bank statements from ATMs (Geldautomat), and make purchases. However, you should note that withdrawing money from another bank’s ATM will incur extra charges.

Most debit and credit cards are accepted in Germany. ATMs can be found nearly everywhere and generally offer good exchange rates (there are transaction charges for international card use that can quickly add up).

Otherwise, you can exchange cash at bank branches, bureaux de change and even post offices – surprisingly, post offices offer some of the best rates.

Taxes in Germany

If you have lived in Germany for more than six months in a year or have a permanent residence, you are considered a tax resident. Those who are tax residents will have to pay tax on income derived from worldwide sources. High earners pay much more tax than those on lower salaries.

Taxes are largely automatically deducted from an employee’s pay cheque by their employer. In Germany, as in most European countries, workers are taxed throughout the year, and adjustments are made for possible under- or over-payments at the end of the year.

Income tax rates increase progressively up to 45 percent. A solidarity surcharge (almost 6 percent of income tax) must also be paid. No income tax is charged on basic allowances.

As an expat, you must get a tax card when you start working in Germany. Self-employed people must complete a tax return at the end of each tax year.

Germany has double taxation treaties with many countries, but all expats must complete an annual tax return regardless of whether they are formally employed or do freelance work.

Useful links

• Federal Central Tax Office

Information about tax allowances and rates change regularly, so expats are advised to check with the authorities for the latest information