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Taxes and Social Security Taxes

The following factors play an important role in professional life. Therefore we have compiled the essential information for you.

You will find an overview of the taxes and social security taxes at the Kshort information for students.

Wage tax
Social security

 

Wage tax

The wage tax is a form of income tax that is levied on income from employment. The employer deducts wage tax at source and pays it to the tax office as advance payment.

In order to pay the wage tax, the employer must get the tax identification number (tax-ID) and the date of birth. With this tax-ID, the employer retrieves the ELStAM (Electronic Wage tax Deduction Characteristics), which holds information about tax class, church tax or  child allowance, if applicable.

If you do not have a tax-ID yet, you can apply for it at the Central Office for Taxes.

In general, as an unmarried person with a statutory health- and pension insurance you are placed in tax class I. If you have two jobs, you are placed for the second one in tax class VI, for which a higher tax rate is retained (you will find details on tax classes at § 38b EStG).

After the end of the calendar year, the taxes retained by the employer can be refunded, if you hand in an income tax return and if certain allowable financial limits are not exceeded.

If your gross income does not exceed an allowance of 8820 € (2017, plus the so-called flat-rate professional allowance of 1000 €), a full reimbursement of the taxes can be expected.

So, if you have a job where you pay taxes, it is by all means worthwhile to make an income tax return. As a rule, you hand it in via ELSTER, under certain conditions you can also hand in a so-called ‘simplified tax return’.

You will find detailed information in regard to income tax on Central Office for Taxes or on Oberfinanzdirektion Niedersachsen.

 

Social Security

The German Social Security is a statutory insurance scheme that includes unemployment insurance, health insurance, nursing care insurance, pension insurance and accident insurance.

If you have a job besides your studies, as an employee you are not subject to social insurance obligation in regard to health insurance, nursing care insurance and unemployment insurance, which means that student and employer have to pay lower contributions (you must have a health insurance, though, see Versicherungen).
There is an obligation to have a pension insurance, still. You can apply for an exemption, but then neither your income nor the time worked will be taken into account in regard to your future pension (that has an influence on the height of your pension and the point of time, from when on you will get it).
You should consider whether a short-term additional earning (by ceasing of deductions) or a long-term crediting on your pension is more beneficial for you in regard to your actual situation and your further planning.

Social Security Number
When you start working, you have to give your social security number to your employer.
If you do not have such a number yet, you have to apply for it via your health insurance at the German Pension Insurance. You will get your social security number (which is at the same time your pension number) per mail. You ought to keep this letter save.