Individual - Significant developments

Last reviewed - 23 December 2023

Social security contributions

As of 1 January 2022, the income ceiling for mandatory pension insurance has decreased from 85,200 euros (EUR) to EUR 84,600 (EUR 81,000 in the new federal states). The adjustment of the contribution ceiling is also applicable to unemployment insurance.

Additionally, the income ceiling for mandatory health and long-term care insurance will remain unchanged in 2022 compared to 2021 at EUR 4,837.50 per month (EUR 58,050 per year).

The 2022 contribution rate to German state unemployment insurance will remain 2.4%. The rate for pension insurance is 18.6%. The contribution rate to the health insurance system is fixed at 14.6% and the rate for nursery care insurance at 3.05%. All mentioned rates are shared equally between employer and employee.

Reduction of solidarity surcharge tax

As of 1 January 2021, the application of the solidarity surcharge tax has been substantially reduced. In general, no solidarity surcharge is levied any longer for individuals filing separately and having an income tax burden of not more than EUR 17,543 (approximately equivalent to a taxable income of EUR 65,500) as well as for married filing jointly taxpayers with an income tax burden of not more than EUR 35,086 (approximately equivalent to a taxable income of EUR 131,000). Where the aforementioned thresholds are exceeded, a sliding scale is used so that the top 5.5% solidarity surcharge would eventually only apply in full for individuals filing separately and having a taxable income of approximately EUR 101,400 or married filing jointly and having a taxable income of approximately EUR 202,800. The full rate of solidarity surcharge is applied on capital investment income subject to lump sum taxation and on employment income taxed at lump sum rates.

COVID-19 reliefs

A number of COVID-19 relief measures were enacted in 2020 and were still in force in 2021. These encompass the possibility for an employer to grant a tax-free employment payment or benefit up to a total of EUR 1,500 until 30 June 2021 and to pay a tax-free uplift within a limited range to the short-time work allowance until 3 June 2022.

The maximum amount of loss carryback for income tax purposes was increased to EUR 10 million (single filing) / EUR 20 million (married filing) for tax years 2020, 2021, 2022, and 2023.

For dependent children, a one-time cash bonus of EUR 300 per child in 2020, of EUR 150 per child in 2021, and of EUR 100 per child in 2022 is paid.

A home office lump sum expense of EUR 5 per day for a maximum of 120 days per calendar year may be claimed for tax purposes in 2020, 2021, and 2022. In 2023, the lump sum expense increases to EUR 6 per day for a maximum of 210 days per calendar year.

The filing deadline for 2021 income tax returns was extended until 31 August 2023 for those taxpayers assisted by a professional tax adviser.

Property tax

As the current system of the property tax has been declared unconstitutional by the German Federal Constitutional Court, property tax will be levied on the basis of the new law from 1 January 2025 onwards. Therefore, all real property must be revalued. Relevant data is currently collected from the owners of the real property by the tax authorities. The declaration to establish the value of the real estate tax must be submitted by 31 January 2023.