If you are moving to Germany, one of your top priorities should be setting up a bank account in a local bank so you could properly manage your finances. In order to do this, you should first have proof of permanent address. Then, consider what exactly are your needs and what is the amount you will be earning each month, as some banks require a minimum deposit.
If you are uncertain about how to open a bank account and manage taxes in Germany, read on to find out everything you need to know.
Opening a bank account in Germany
Even though you could probably continue to use your local bank, opening a bank account in Germany is useful because it will save you the international transfer fees. You could consider joining Sparkasse – banks that are run by the state. You could withdraw from any Sparkasse with no extra charges – there are plenty of branches within the country. If you are looking to use online banking, you should know that you have to pay 3 euros per month for an account with that option.
Other top banks in Germany include Deutsche Bank, Commerzbank, DZ Bank, KFW Bankgruppe, Landesbank Baden-Württemberg.
How to open a bank account online as a non-resident
If you have not claimed your Permanent Resident status yet, you could still open a bank account but you have to be present in Germany. Most banks will require a minimum of 1000 euros per month as a minimum deposit. Monthly fees are quite low and most commonly not more than 5 euro. There are several banks with no fees including DKB, ING DiBa, Comdirect, N26.
Another option is to use one of the online banks so that you can receive your salary and manage your finances through your mobile phone. Some of the best online banks in Germany are Comdirect, Deutsche Bank, Fidor Bank, DKB, or N26.
If you will be signing up for a bank account online, you can prove your identity with Postident. To do so, take your national ID card, passport, or student registration to one of the local post offices in Germany, together with the printed verification form from the bank. Sign the document, then send it to the bank. In addition, you could also verify your identity with Deutsche Post online, or through your lawyer.
If you are a foreign student, you will need to show you can support yourself while you are studying in Germany. To do so, you need to open a ‘blocked’ account and deposit 10 236 euros at least. You will not be able to access the account until you are in Germany and then you can withdraw up to 853 euros per month.
To open a bank account in Germany, you will need to present your passport or ID card, proof of address in Germany, and your German tax number. In addition, some banks might require an employment contract, a residence permit, or in case you are a student – a foreign tax identification number and proof of home address.
How to manage your taxes in Germany
In Germany, the tax system is ‘progressive’ which means that the higher your income, the higher tax you will pay. These rates can range from 0% to 45% and you can benefit from better rates if you are filing as a married couple rather than a single individual.
If you are earning up to 9 408 euro, there is no tax. Then it is 14% for income of 9 408 and over, 42% for income of 57 051 and over, and 45% for income of 270 500 and over.
Your employer will deduct a certain amount from your salary each month (called Lohnsteuer) and you will also have to pay 5.5% of your basic income tax for the so-called “solidarity surcharge”.
If you are self-employed, you will have to pay self-employment tax – to do so, you need to register at the tax office, receive a German tax number, and input that on the invoices you send.
If you were baptized or christened, you will also need to pay church tax – depending on where you are living, it is 8-9% of your annual income. You can opt-out to pay this tax, but you will have to go to the civil registration office or official court, pay a tax, and leave the church officially.
You will also pay 14.6% of your salary for social security – this includes unemployment benefits, pension insurance, health insurance, and long-term care insurance.