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Faculty of InternationalSample Institute

Taxation

Research Visit Based on a Fellowship

If your research visit to Germany is supposed to take place in the framework of a fellowship you may, under certain circumstances, be exempt from taxation under German income tax law. It is certainly worth consulting the organisation which has awarded the fellowship on this point. Furthermore, you should find out whether the fellowship paid in Germany is subject to taxation in your own country.

The preconditions for tax exemption on fellowships in Germany are:

  • award from public funds or via a public or nonprofit agency (recognised under German law)
  • sponsoring research or academic or artistic training or continuing education
  • no higher than the amount required to fulfill the research task or to cover living and training needs
  • grant according to the regulations of the donor
  • no quid pro quo requirement or employment of the recipient

Research Visit Based on an Employment Contract

If your research visit is based on an employment contract in Germany and will last more than 6 months you will effectively be liable to taxation in Germany on your globally-earned income and assets.

Income tax

Income tax is deducted from your salary at source and paid to the state directly by your employer, i.e. the university. The amount of taxation depends on income, marital status and tax bracket. When you first start work and at the beginning of every subsequent calendar year, you will have to hand a “Lohnsteuerkarte” (tax card) in to your employer. It contains personal details that are relevant for taxation, such as whether you are married and have children. You can obtain this card from the “Einwohnermeldeamt” (Residents’ Registration Office) in your place of residence. However, an electronic system is currently being developed: in future, every person registered will be issued with a life-long ID number. You will usually be sent this number by post a few days after registering at the Residents’ Registration Office. During the transition period, a paper tax card will still be issued; it will probably be abolished completely in 2011 and replaced by the “Steuer-Identifikationsnummer” (tax identification number).

Double Taxation Agreements

In order to avoid a situation in which foreigners are liable to pay tax both in Germany and in their own countries, double taxation agreements have been signed with many countries. They regulate in which country you have to pay tax. If you stay in Germany for less than 6 months, your income will be taxed in your own country provided that you work for a foreign employer and that the double taxation agreement assigns the right of taxation to your own country. If one of these conditions is not met, your salary will be taxed in Germany. Agreements exist with some countries stating that university teachers and researchers who come to Germany for a maximum of two years to work on research at a public research institution may pay their taxes in their own countries. Details can be found in the double taxation agreements between the Member States of the EU and other countries at the website of the Federal Ministry of Finance.

Tax Return

At the end of each calendar year you may apply to the tax office at your place of residence for a “Lohnsteuerausgleich” (income tax adjustment). This may entitle you to a partial refund of tax paid. The necessary documents can be obtained from the local “Finanzamt” (tax office) or “Rathaus” (town hall). You can also submit a tax return from your own country if you have already returned home. It must reach the local tax offi ce by May of the following year; at the very latest by 31 December. When the tax office has processed the tax return you will receive a “Steuerbescheid” (tax statement) informing you whether and to what extent tax will be refunded. It may be worth paying a “Steuerberater” (tax accountant) to help you complete your tax return.

Church Tax

An unusual feature of taxation in Germany is statecollected “Kirchensteuer” (church tax). Under certain circumstances, churches can have their tax collected for them by the tax office. In the case of the major churches, church tax (roughly 9% of income tax) is collected by the state together with income tax and automatically deducted from your monthly salary. This is the reason why you are asked to state your religion when you register at the Residents’ Registration Office. If you belong to the Roman Catholic Church, the Lutheran Church, the Reformed Protestant Church, the Jewish Community or certain Protestant Free Churches you are required to pay church tax in Germany. This does not apply however, if you belong to the Anglican Church or the Orthodox Church. If in doubt, ask for advice at the Residents’ Registration Office.