German income tax for Australians in Berlin

Germany takes tax straight out of your pay, then quietly hopes you'll file a return and claim some of it back. Most Australians don't, and that's money left on the table.

The short version

Your employer deducts wage tax (Lohnsteuer) monthly using your tax ID and your tax class. Single people are in class I; married couples choose between IV/IV and III/V [3].
In 2026 the tax-free allowance is €12,348. The solidarity surcharge (Soli) only bites for single people with taxable income above about €75,000, and church tax applies only if you're registered as a church member [1].
A return is compulsory in some cases, such as two jobs at once, the III/V class combination, or more than €410 of other income. Otherwise it's voluntary, and you have four years to file [2][3].
The current Australia–Germany tax treaty has applied since 2017. It decides which country taxes what and stops you paying full tax twice [4][5].
Leaving Australia doesn't automatically end your Australian tax residency. Sort that out with the ATO separately.

How German tax comes out of your pay

There's no PAYG summary and no 30 June. The German tax year runs from January to December. Your employer gets your tax details electronically from the tax office through a system called ELStAM, which holds your tax class, any child allowances and your church tax status [3]. That's why your employer asks for your Steuer-ID on day one. Without it you'll be taxed in class VI, the most expensive one, until it arrives.

The six tax classes

The class doesn't change how much tax you owe for the year. It only changes how much is withheld each month. Get it wrong and you either wait for a refund or get a bill.

Class	Who it's for	What it means in practice
I	Single, separated or divorced, or married to someone who doesn't live in Germany	The default for most Australians who arrive alone
II	Single parents living with their child	Class I plus a relief amount
III	The higher earner in a married couple	Low withholding; partner must be in V
IV	Married couples on similar incomes	Each taxed roughly like class I; can add a "factor"
V	The lower earner, paired with III	High withholding on that salary
VI	A second job held alongside the first	Highest withholding, no allowances

If you marry or your partner moves to Germany with you, you can change class through ELSTER or the Finanzamt. Choosing III/V or IV with a factor makes a return compulsory [2], so only pick it if you're happy to file every year.

Soli, church tax and the 2026 numbers

Germany's income tax is progressive, a bit like ours, but the curve is smooth rather than stepped. Here's what changed for 2026, according to Berlin's finance department [1]:

Tax-free allowance (Grundfreibetrag): €12,348 for a single person, up €252.
Solidarity surcharge: 5.5% on top of income tax, but only above an exemption limit equivalent to €74,969 of taxable income for a single person and €149,937 for a couple filing jointly.
Commuting allowance: 38 cents per kilometre of the one-way trip to work, now from the first kilometre.
Child benefit (Kindergeld): €259 per child per month.

Rates start at 14% just above the tax-free amount and climb steadily to 42% for higher earners, with a 45% top rate for very high incomes. Social insurance (pension, health, unemployment and long-term care) comes out on top, usually around a fifth of gross pay for the employee's share. That's the big shock for Australians used to income tax plus a small Medicare levy.

Church tax: the box that costs you

When you register your address at the Bürgeramt, the form asks your religion. Tick Catholic or Protestant (evangelisch) and you'll pay church tax: 9% of your income tax in Berlin, collected through your pay. If you were baptised but don't want to pay, leaving is a formal step at your local district court (Amtsgericht). It costs €30, needs your passport and registration certificate, and church tax stops at the end of the month your declaration arrives [6]. Berlin police warn against paid online "exit services"; the court is the only route [6].

When a tax return is compulsory, and when it's worth it

Compulsory (Pflichtveranlagung)

Service Berlin lists the main triggers for employees [2]. You must file if:

You worked for more than one employer at the same time.
You and your spouse used III/V, VI, or IV with a factor.
You received more than €410 of wage replacement benefits such as unemployment benefit, sick pay or parental benefit.
You had more than €410 of other income not taxed through payroll. For Australians that can include rent from a flat back home, so ask the Finanzamt if you're unsure.
A tax-free allowance was built into your wage tax during the year.

The deadline for a compulsory return is 31 July of the following year, so 31 July 2026 for tax year 2025. With a tax adviser or a tax aid association (Lohnsteuerhilfeverein) you get much longer [2][3].

Voluntary (Antragsveranlagung)

If none of the triggers apply, filing is optional, and you have four years: the 2025 return can go in until 31 December 2029 [3]. It's often worth it in your arrival year. Monthly withholding assumes you earned that salary all year, so if you started work in, say, August, too much was probably taken.

What you can claim

Expense	How it works in 2026
Work costs (Werbungskosten)	Everyone gets a €1,230 lump sum automatically; claim actual costs if they're higher [7]
Commuting	38 cents per km of the one-way distance, per day worked [1]
Working from home	€6 a day, up to €1,260 a year [7]
Union fees	Deductible on top of the lump sum from 2026 [1]
Moving costs	Relocating for a job can count in some cases; check before claiming
German course	May count if your job needs German; check first

Keep receipts. The Finanzamt may ask for them, and Berlin tax offices take about seven to nine weeks to process a return [3].

Filing with ELSTER, step by step

ELSTER is the tax office's free online portal. Processing can't really start before mid-March, because employer data only reaches the tax office around then [3].

Register at Mein ELSTER with your tax ID. Activation codes come by post and can take up to two weeks [2].
Wait for your employer's annual wage statement (Lohnsteuerbescheinigung), which is uploaded automatically.
Open the main form and the employee annex (Anlage N). Much of it is pre-filled.
Add Australian income where asked, in the foreign income annexes (Anlage N-AUS for salary, Anlage AUS for other income), with any Australian tax paid.
Add deductions and upload key receipts.
Submit and wait for the assessment (Steuerbescheid). You have a month to object if something's wrong.

ELSTER works in German only. Paid tax apps with English interfaces exist, and they plug into ELSTER, but check the fee before you start.

The Australia–Germany tax treaty

Australia and Germany signed a new double tax agreement in Berlin in November 2015. It came into force on 7 December 2016 and replaced the 1972 treaty, with its rules taking effect from 2017 [4][5]. The parts that matter to most Australians in Berlin:

Dual residence: If both countries treat you as resident, tie-breaker tests apply in order: permanent home, centre of vital interests, habitual abode, then nationality [5].
Salary: Generally taxed where the work is done. A short stint in Germany for an Australian employer can stay taxable only in Australia if you're there no more than 183 days in a 12-month period and the cost isn't borne by a German branch [5].
Investment income: Germany or Australia can tax dividends at source at up to 15%, interest at up to 10% and royalties at up to 5%; your country of residence then gives relief [5].
Pensions and social security: Private pensions are generally taxed where you live. Social security pensions first paid from 2017 can be taxed by the paying country at up to 15% [5].
Relief: Australia gives a credit for German tax. Germany either exempts income taxed in Australia (but uses it to set your rate) or gives a credit, depending on the type of income [5].

What the ATO still wants

The treaty doesn't decide your Australian residency; Australian law does. If you've moved to Berlin for good, you may well become a non-resident, and then Australia only taxes your Australian-sourced income. If you stay an Australian resident, you declare your German salary in your Australian return and claim a foreign income tax offset for German tax paid. Our guide on Australian tax residency after moving covers the tests. Tell your Australian bank and super fund if you become a non-resident, so the right withholding applies to interest.

Want to compare notes on ELSTER screens? Cooee Germany, our Facebook group for Australians in Germany, has plenty of people who've filed their first return.

German income tax for Australians: tax classes, Soli and your first return