Money in Germany

Personal experience

Maria Kornilova

Journalist

I live in Kaiserslautern, a small town about an hour’s drive from Frankfurt. My young man came from Georgia and has been living here for 15 years. He graduated from a German university, has a permanent residence permit with the right to obtain citizenship and an official job in a German company. He pays all taxes and enjoys social services on an equal footing with Germans. Advantages of the passport: you can vote, work in the police and take loans on more favorable terms.

Taxes

As Deutsche Welle writes, in the tax ranking of EU countries, Germany is between the Baltic States (rate of 22%) and the Scandinavian countries (over 50%). In fact, a little less than half of every euro earned is spent on taxes.

In addition, Germany has one of the most complex and flexible tax laws in the world. For example, there are taxes for dog owners, a church tax, and even a tax on acetic acid. Each taxpayer has a class depending on health and having a family, children.

There are separate rules for entrepreneurs and freelancers. And quite a few ways to reduce the amount of tax. Here are some of them:

expenses for caring for a sick family member
expenses for costs associated with professional activities (purchase of office supplies, literature, advertising costs, preparation and mailing of resumes when looking for a new job),
gasoline costs if you travel from home to work by car (30% per kilometer).

Significant tax benefits are available to schoolchildren, students, disabled people, people in temporary employment, and people with families and children.

Tax Classes

Each class has its own taxation nuances

“My tax class 1. Total annual earnings – 37,800 euros (2,725,671.06 rubles). Total payroll tax – 5,557 euros and 47 cents (400,736.38 rubles). I also pay a mandatory solidarity supplement – for the development of the federal states. This year it amounted to 305 euros and 60 cents (22,036.1 rubles). We pay insurance and health premiums with the company in half – a total of about 7,000 euros (504,753.9 rubles). I also pay car tax annually – 310 euros (22,353.38 rubles). Car owners pay annual insurance. It costs me 800 euros annually (57,686.16 rubles)”.

David Dzindzibadze

Savings, deposits, investments

The Welt reports that according to a survey, only 42% consider investing in the stock market an “interesting tool” but have never used it. Why? 40% of respondents admit to a lack of knowledge about investing on stock markets. Another 14% of respondents consider earning money on stocks to be questionable. This is mainly because about 50% of respondents consider this instrument to be potentially risky and unprofitable. Another 43% find investing “an occupation for the rich”.

Our acquaintances and friends mostly save money for their future retirement.

Savings, deposits, investments

The Welt reports that according to a survey, only 42% consider investing in the stock market an “interesting tool” but have never used it. Why? 40% of respondents admit to a lack of knowledge about investing on stock markets. Another 14% of respondents consider earning money on stocks to be questionable. This is mainly because about 50% of respondents consider this instrument to be potentially risky and unprofitable. Another 43% find investing “an occupation for the rich”.

Our acquaintances and friends mostly save money for their future retirement.

“The best investments are retirement savings and good paid health insurance. Real estate is also good, but it’s expensive to maintain extra land or a house and pay taxes on it.”

Brunny Thelen

Medicine

All taxpayers and privileged groups of citizens can use medical services for free. But in fact we face the same problems as in a typical Russian polyclinic – appointments to doctors 2 weeks in advance. One can wait for months for appointments with narrow specialists, and doctors do not like to spend time and money on preventive examinations. They will not sell you anything more serious than aspirin or vitamins without a doctor’s prescription. If you need it urgently, it is better to go to a private medical center. But if a patient needs surgical intervention – he will get it immediately. Quality and free of charge.

Cosmetology services, of course, are not included in the standard insurance and are very expensive.

“My son was born with a heart defect. He needed an urgent series of operations. They don’t do such operations in our town, so we were sent to the nearest big city – Mainz. We only paid for the transportation.

Helena Kleiman

Cost of medical services

Kaiserslautern, photo by the author

Housing

We have a small one-bedroom apartment practically in the center of Kaiserslautern. We pay 400 euros (28,843.08 rubles) in rent. But we are lucky: we were recommended by previous tenants, and the owner of the apartment rents it out just to pay the property tax. In general, the price range in our city for the same apartment as ours, but further away from the center – 500-700 euros (from 36,053.85 – 50,475.39 rubles). An important nuance: renting an apartment is practically a job interview. The more prestigious the profession, the more chances to rent a good apartment. A doctor or an engineer will rent an apartment instantly.

Own housing can be purchased in the mortgage at an average rate of 1.5-2% per annum for a person with a German passport.

One-bedroom apartment in Kaiserslautern (within the city) will cost 50 000 – 284 000 euros (3 605 385 – 20 478 586.8 rubles). Depending on the area, neighborhood and level of finishing.

Nutrition

Most of the products on the store shelves are local, which is reflected in their cost. For two people, we rarely spend 20-30 euros (1,442, 1 – 2,163.2 rubles). The food bought with this money is enough for a week and a half. The difference between stores is fundamental. There are two large German chains in our city – ALDI and KAUFLAND. The first one offers cheaper products. In the second one, there is more choice, but the prices are much higher.

Approximate cost
of products at ALDI

Transportation

Single tickets for public transportation are charged at zone rates. The farther you travel, the more expensive it is. It’s better to take a bus pass. You can travel between cities by train – Deutsche Bahn. But a bus ticket is cheaper. The most popular and inexpensive network in Germany (as well as in the whole Europe) is FlixBus. For comparison: a train ticket from Kaiserslautern to Mainz (just over an hour away) will cost almost 26 euros (1,874.8 rubles). A bus ticket in the same direction is 10-11 euros (721 – 793.1 rubles).

A car is convenient, but expensive.

We fill up with diesel fuel and spend about 1.3 euros per liter (93.8 rubles).

Gasoline and diesel prices are rising significantly every month. The biggest jump this year was in February.

“The cheapest fuel nearby is in Luxembourg. We live practically next door to another country, and sometimes it’s more profitable to go there to fill up a full tank.”

David Dzindzibadze

Children and education

Child allowance increases every year. This year it is 7,620 euros (549,460.6 rubles) per year per child. Of this, 4980 euros (359,096.3 rubles) is the necessary subsistence minimum and 2640 (190,364.3 rubles) is for care and education needs. The allowance can be received not only by German citizens, but also by those who have received a residence permit. It is paid not only until the age of 18. If the child continued studying at a university, Kindergeld will be paid until the end of training.

The education system consists of three stages: preschool, secondary, higher education. The cost of kindergartens and the duration of education at each level in each federal state are set by the local authorities. School education is free of charge.

After elementary school, children are divided into groups depending on their success. Weaker pupils enter the Hauptschule and after graduation can work or continue their studies at a vocational college (Fachschule). Average students enter the Realschule, after which they can also get a working specialty or continue their studies to prepare for university. Pupils with good grades continue their studies at a higher school or gymnasium. This is a prerequisite for continuing their studies at university. There are no entrance examinations: the selection is based on certificates. Higher education is conditionally free of charge, but the universities or federal states may set their own fees.

The average age of graduation is 23-24 years.

Pension

Germany has a three-tier pension system. It consists of state pension (guaranteed part for all employees, which depends on salary), industrial pension (divided into pension for civil servants and pension for employees of private companies) and private pension insurance (employees’ own contributions to their future pension). At present one can retire at 67, but the retirement age is planned to be gradually raised to 70.

Every year the pension increases ahead of inflation.

However, average pensions in Germany are very small and vary from state to state.

“If you save up for a good health insurance in advance, my wife and I have enough pension not only to live comfortably, but also to travel every 3-4 months.”

Hans Merz

Average pension in Germany

Salaries

In Germany, salaries strongly depend on “geography” – each federal state has its own budget and its own “career orientation”. For example, if you work in the banking sector, for high salaries you should go to Frankfurt.

Highest paid professions:

Doctors: €84,000
Banking employees: 70,000 euros
Engineers: 66,000 euros
IT workers: 64,000 euros
Lawyers: €63,000
Insurance agents: 62,000 euros
Financiers: €61,000
Marketers: €56,000
Entertainment

Our city has a couple of cinemas, cafes, restaurants and bars, one large shopping mall and one of the largest forests in the whole of Germany – the Palatinate Forest. On all major holidays – Christmas, Easter – almost every town has town festivals and fairs.

The cost of entertainment
in a small German city

Most cafes, stores, companies and even large retail chains do not have not only “live” social networks, but also websites with price lists. The market for consumer and beauty products is the best with marketing. So if you need detailed information about the organization or prices, it is better to call.

All prices in rubles are given taking into account the Central Bank exchange rate as of 18.06.19: 72.1077 rubles per 1 euro.

Conclusions
There are more than 40 types of taxes in Germany.
Germans are reluctant to invest in securities.
You can get free medical care with insurance in Germany, but you have to wait a long time for a doctor’s appointment.
To rent a good apartment, you need to have a prestigious profession. Most willingly rent apartments to doctors and engineers.
The mortgage interest rate is on average 1.5-2% per annum.
Most of the food in the stores is local. 20-30 euros (1,442.1 – 2,163.2 rubles) is enough to buy groceries for a week for two people.
All social payments (child allowances, pensions) are indexed every year according to inflation.
Germany has a three-stage education system with paid kindergartens and free schools.
There are no entrance exams in Germany – selection is based on the average points in the certificate.
The retirement age is rising. The average pension does not exceed 1171 euros (84,438.1 rubles).
The highest salaries are in the federal state of Hesse. Doctors, bank employees and engineers earn the most in Germany.
The Internet is not the best source of information. If you want to know something, it is better to call the organization you are interested in.