Before you start

Steuer-ID, issued automatically after Anmeldung
Understanding of your tax class
Records of foreign income and foreign accounts
An ELSTER account, if filing yourself

Step-by-step

1
Give your employer your Steuer-ID as soon as it arrives
Until they have it, payroll applies the least favourable class and a large amount comes off your pay — recoverable but painful.
Via employerWho: YouAs soon as issued
2
Understand your tax class
Steuerklasse determines monthly withholding: class 1 for single people, 3/5 or 4/4 combinations for married couples. Choosing 3/5 where incomes are uneven reduces monthly withholding, though the annual liability settles at filing either way.
OnlineWho: You
3
Check your church tax position
If you declared church membership at Anmeldung, 9% of your income tax is deducted automatically in Hesse. Formally leaving requires an appointment and a fee, taking effect from the following month rather than retrospectively.
In personWho: You
4
Understand how bonuses are taxed
Frankfurt finance packages often carry substantial bonuses, and German payroll taxes a one-off payment using a method that can withhold heavily in that month. It generally evens out at annual assessment, but the in-month deduction surprises people. Do not budget against a gross bonus figure.
Via employerWho: You
5
File a return even if not required
A return frequently refunds — commuting costs, work equipment, relocation expenses, professional training and double-household costs are all deductible. The relocation year is especially likely to produce a refund.
OnlineWho: YouBy 31 July following the tax year
6
Report foreign accounts and income
German tax residents are taxed on worldwide income subject to treaty relief, and foreign accounts must be declared. Germany participates in automatic information exchange.
OnlineWho: You

Documents you’ll need

Steuer-ID
Lohnsteuerbescheinigung — the annual employer certificate
Records of deductible expenses, including the move itself
Foreign income and account records
Certificate of tax residence from your home country, for treaty claims

Things most newcomers don’t know

A one-off bonus can be withheld at a punishing rate in the month it is paid.

German payroll treats a sonstiger Bezug — a one-off payment like a bonus — by annualising it to determine the rate, which in the month of payment can withhold far more than your average rate. It generally corrects at annual assessment, but the cash-flow effect is severe and it catches Frankfurt finance arrivals every year. Budget on net, and expect the correction at filing.

Source: Bundesministerium der Finanzen

Church tax is 9% in Hesse and you opt in at registration.

Declaring church membership during the Anmeldung triggers automatic deduction of 9% of your income tax. On a Frankfurt salary that is substantial, and the decision is made in a five-minute appointment most newcomers do not realise has a price.

Source: Hessisches Ministerium der Finanzen

Relocation costs are deductible and the moving-year return usually refunds.

Costs of a work-related move — transport, travel to view flats, double rent during transition, and a flat-rate incidentals allowance — are deductible. New arrivals frequently do not file in their first year and leave a substantial refund unclaimed.

Source: Bundesministerium der Finanzen

Social security is deducted on top and it is substantial.

Pension, health, unemployment and long-term care contributions come off gross pay in addition to income tax, split with the employer. A German gross salary converts to net considerably less favourably than in low-social-charge financial centres like Dubai or Singapore — compare offers on net.

Source: Deutsche Rentenversicherung

Common mistakes to avoid

Budgeting against a gross bonus figure and being caught by the month's withholding.
Declaring church membership at Anmeldung without realising it triggers 9% church tax.
Not filing a return in the relocation year and forfeiting a likely refund.
Comparing a Frankfurt gross salary against a Dubai or Singapore one without accounting for social contributions.
Delaying giving your employer the Steuer-ID and losing cash flow to emergency withholding.

Some of this may be out of date. Spotted something inaccurate? Help us keep it right for the next newcomer.