U.S. Tax Information
Internal Revenue Service
P.O. Box 920
Bensalem, PA 19020
(215) 516-2000 (not toll-free)
Phone service available from 6:00 am to 11:00 pm (EST) M-F
The Internal Revenue Service (IRS) office serving Germany is located in Philadelphia, and provides U.S. Federal tax assistance to Americans in Germany. The IRS Home Page, www.irs.gov , has a lot of information available to answer many questions. Go to ‘Individuals’ and then ‘Overseas Taxpayers’ you will find a section of FAQ, which will take you to IRS Publication 54. Many questions of overseas taxpayers can be answered from that source.
One point to remember for all overseas taxpayers is that the United States taxes its citizens on their worldwide income. Even though they may be eligible to exclude a certain amount of their earned income from their income tax computation, they must file a US tax return in order to claim that exclusion.
Expatriates living in Germany can be subject to German taxes, especially if they have German source income. The German tax system is similar to the structures in other western countries. You pay income taxes throughout the year, usually with an employer deducting tax from each paycheck. Adjustments are then made at the end of the year for possible under or overpayments.
In addition to the various forms of income tax there is also a series of sales taxes that significantly impact both individuals and businesses. The major tax is the Mehrwertsteuer (value added tax), which accounts for a quarter of the government’s revenue and is second only to the Lohnsteuer in this regard. The Mehrwertsteuer assesses a levy on each step in the production and delivery of most items available for purchase. It applies to services as well as goods and the standard rate is 16%. A reduced rate of 7% applies to certain products, including food and printed material. Medical and insurance services are generally exempt, as are exports of goods abroad and services rendered abroad.
Numerous other items, including gasoline, alcoholic beverages, tobacco products, tea and coffee, carry sales taxes in addition to the Mehrwertsteuer.
Due to the complexity of both the U.S. and German tax systems and their interaction with one another, it is always recommended that you hire a tax consultant (Steuerberater/CPA) to guide you through the intricacies involved in filing returns as well as provide some ease of mind during your stay abroad. In addition, the German Finanzamt will give you tax advice at no charge. If you are interested in further information about the German tax system, refer towww.bundesfinanzministerium.de