Deductions

German tax system

In every case please ask a consultant for special requests.

PLEASE REMEMBER: The German tax system is very complicated and we can`t write every law in German in just one homepage. We have tried to show you the German tax system in an easy way. For all the following details there are a lot of special rules which have not been descriped by us. Please speak with a tax consultant.

What about deductions?
1. Deductions for your income as an employee:

You can deduct a basic amount of 920 Euro from your income as an employee if you have no real costs.

As costs you can deduct:

costs for public transportation

an basic amount per km for the travelling by car

costs for maintaining two homes

costs for an office in your own home

costs for books, courses, working equipment, moving expenses, travelling expenses, etc.

If you are travelling by public transportation you can choise the best way for you: You can declare the real costs for your ticket or you can declare 0,30 Euro per km (the same costs as if you were driving by car).

2. Deductions for your income as a freelancer:

There are no basic amounts. You can deduct all your costs for your company such as telephone, faxmachine, costs for your office in your own home, costs for maintaining two homes, books, rents and all the costs for your car etc.

3. Deductions for your interests and dividends from stocks:

You can deduct an lump sum of 801,00 Euro, if you are single and double this amount if you are married.

Half of the income from dividends is exempt from tax. Interests are fully liable to tax. For exact details please ask your tax consultant.

4. Deductions for a Pensioner

If you are in receipt of an income as a pensioner you deduct an lump sum of 102 Euro. But: You needn`t pay tax on the full amount of your pension, only a certain percentage.

Example:

A Lady who is 63 years old retires in 2008. She receives a pension with an amount of 15.000 Euro for 2008. She must pay tax on 56 % of 15.000 Euro.

For further information please ask your tax consultant.

5. Deductions for your income from a commercial enterprise

Please look at point 2.

6. Deductions for your income as a landlord

You can deduct this costs of the interest on a loan and all costs that you have with the flat or the house. You can also deduct 2% per year from the price you have paid for a house or a flat (not from the price for the ground).

Deductions for your income from speculations

The follow points are the main ones:

Stocks

If the time between the date of buying and selling stocks is under 1 year you must declare 50% per cent from the profit that you have earned. You can deduct the buying price from these stocks.

Bonds

If the time between the date of buying and selling bonds is under 1 year you must declare 100 % per cent from the profit that you have earned. You can deduct the buying price from these bonds.

Buildings

If the time between the date of buying and selling a building is under 10 years you must declare 100% from the profit that you have earned (profit= Selling price plus deductions minus buying price).

8. Other deductions

school fees for your children

Charity contributions

contributions to pension- life- health- and accident ? insurance

maintenance for an ex ? spouse, if the ex ? spouse declares this amount

costs for a tax consultant

church tax

extraordinary costs like costs because of illness, divorce costs (but only extraordinary costs)

9. Deduction for maintaining from two homes

Only applicable if you were separated from your spouse and family due to your employment, or if your family relocated to Germany but the main residence is maintained.
For singel people, if the dwelling in the home country was retained and still available for your personal private use.

For further information please ask your tax consultant.