Opening a bank account
In order to rent an apartment or receive payment of your salary, you need a German bank account. You may open an account at the German bank of your choice. To open the account, you will need the following documents:
- Identity card or passport
- Residents’ registration certificate
- Depending on the type of account, a wage certificate
- Depending on the bank, a work permit
Inquire directly at the bank if a wage certificate and / or work permit is required. Once you have all of the aforementioned documents, make an appointment to open a bank account with debit card. Depending on the bank, you can do this by phone or online. You will find this information on the bank’s website. Incidentally, many banks in Berlin now provide their services in several languages.
OUR TIP: If a certain amount (salary) is deposited in your account each month, some banks waive their account management fees. Ask your banker.
Taxes and salary: from gross to net
Today is your first day at work. You must give your employer your tax identification number today. If you do not have a tax identification number, you can apply for one at the tax office (Finanzamt) in your borough. The required form can be downloaded from the tax office website.
OUR TIP: Make a personal appointment to submit your form to the tax office. To do so, you need to present your passport or identity card, birth certificate and proof pertaining to your income tax classification, such as a marriage certificate or your children’s birth certificates.
Once your employer has your tax identification number, he will contact the tax office himself. Your income tax will be deducted each month from your gross salary in the form of payroll tax and submitted by your employer to the tax office. In addition, the employer pays a share of the contributions to unemployment, health, pension, accident and nursing care insurance. The prerequisite is that you be insured with a public or private health insurance provider. The resulting net income will be transferred directly to your bank account.
Payroll tax bands
In Berlin and indeed in Germany as a whole, every employee is assigned by their local tax office to a payroll tax band. In total, there are six different payroll tax bands that help your employer determine how much payroll you need to pay. The payroll tax is a prepaid income tax that is automatically deducted from your salary on a monthly basis before you get it.
Your tax band changes whenever your family situation changes, such as when you get married, split up, a spouse dies, or if you have a child as a single parent. If, in addition to your job, you also accept a part-time job for which you need a second payroll tax card, your payroll tax band will also change.
To help you determine which tax band will be assigned to you, we have summarized the most important criteria and provided the associated monthly tax free allowance that will apply for you:
Tax band 1
Tax band 1 applies to single, separated, widowed or divorced workers. Monthly wages are tax exempt up to 1,029 euros.
Tax band 2
Tax band 2 applies to single parents who are entitled to tax relief so that they are taxed less. The relief amount is 1908 euros per year for one child. In this band, up to 1,225 euros of the monthly salary is tax exempt.
Tax band 3
Tax band 3 applies to the better earning spouse. The partner with a significantly lower income then automatically switches to tax code 5. Switching to tax code 3 is particularly worthwhile if you or your spouse earn significantly more than the other. This will allow you to together reduce the total tax paid.
In addition, tax code 3 applies to widowers during the year in which the spouse died and for the following year. In this band, up to 1,952 euros of an individual’s monthly salary are tax exempt.
Tax band 4
Tax band 4 is automatically assumed if the spouses do not declare anything. It is suitable for all married couples who have similar earnings. In this band, up to 1,029 euros of an individual’s monthly salary are tax exempt.
Tax band 5
You are classified in tax code 5 if your partner chooses tax code 3. In this band, up to 107 euros of an individual’s monthly salary are tax exempt.
Tax band 6
Tax code 6 applies to anyone who has a second job or more than two salaried jobs. Monthly salary is taxable from 0 euros. Payroll tax code 6 is the tax code with the highest deductions.