Banking, Money and Taxes in Germany

As with most things in Germany, expats will find the systems of banking, money and taxes to be sophisticated and easy to navigate. Once an expat has a residence card, opening a bank account is fairly straightforward, everyday transactions are simple since online banking is a standard feature, and credit cards can be used at most outlets. 

Money in Germany

The official currency in Germany is the Euro (EUR), with 1 EUR divided into 100 cents.

• Notes: 5 EUR, 10 EUR, 20 EUR, 50 EUR, 100 EUR, 200 EUR and 500 EUR

• Coins: 1 cent, 2 cents, 5 cents, 10 cents and 20 cents, and 1 EUR and 2 EUR

Banking in Germany

Germany has a well-established and respected banking sector, with some of the major local banks including Deutsche Bank, Commerzbank and DZ Bank. Many international banks also have branches in Germany, including HSBC, Lloyds TSB and CitiBank. Continuing an overseas account through one of these is sometimes a good option for expats.

Opening a bank account

Opening a bank account in Germany is easy and online banking is commonly used to make transactions and manage accounts. Expats opening an account will need to provide their residence card, proof of address and a passport.

To open an account immediately, expats will need to bring a nominal amount of cash. Alternatively, funds can be transferred from overseas but this may take a few weeks.

ATMs and credit cards

Once someone opens an account the bank issues them a Eurocard (EC) which can be used to withdraw cash, print out bank statements from ATMs (geldautomat) and make purchases. But expats should note that withdrawing money from another bank's ATM will incur extra charges.

Most debit and credit cards are accepted in Germany. ATMs can be found nearly everywhere and generally offer good exchange rates (there are transaction charges for international card use that can quickly add up). 

Otherwise, expats can exchange cash at bank branches, bureaux de change and even post offices – which surprisingly offer some of the best rates.

Taxes in Germany

Expats will have to pay tax on income derived from German sources. Higher earners pay much more tax than those on lower salaries.

Taxes are generally automatically deducted from an employee's pay cheque by their employer. As is the case in most European countries, workers are taxed throughout the year and adjustments are made for possible under- or over-payments at the end of the year.

The rate of income tax increases progressively up to 45 percent. A solidarity surcharge (5.5 percent of income tax) also has to be paid. No income tax is charged on basic allowances.

Expat must get a tax card when they start working in Germany. Self-employed people must complete a tax return at the end of each tax year.

Germany has double taxation treaties with many countries, but all expats are required to complete an annual tax return regardless of whether they are formally employed or do freelance work. 

*Information about tax allowances and rates change regularly so expats are advised to check with the authorities for the latest information