The Solidaritätszuschlag is an additional form of tax that was originally conceived to assist with the re-building of East Germany after re-unification.

It was introduced in 1991 and although there was a break of 2 years in the 1990s, it is still valid today and anyone who pays tax in Germany also pays this Zuschlag on top.

The Solidaritätszuschlag is often a point of discussion, especially a to how long we will have to continue paying it - 18 years after re-unification.  However, at the moment there appear to be no plans to discard it again.

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MwSt is the abbreviation for Mehrwertsteuer, which is also known as Umsatzsteuer (USt).  This is the equivalent to VAT in the UK.

At present, MwSt is 19% for most items in Germany, with some items such as basic foodstuffs and books being only 7%.  For some goods and services (eg. stamps) there is currently no MwSt.

The term “Mehrwertsteuer” was introduced in 1968, but the principles were first introduced as a form of stamp duty in 1916.

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The Finanzamt is the German tax office.

Normally, you only contact with the Finanzamt will be your annual tax return - the Einkommenssteuererklärung.

However, if you are self-employed then you will come into close contact with it as you are involved in Umsatzsteuer (VAT) for your business and taxes such as Lohnsteuer for your employees.

The Finanzamt also collects Church Tax on behalf of the churches and if you buy a flat or a house in Germany then they will also send you a bill for Grunderwerbssteuer (land purchase tax).

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The Gemeindeschlüssel is an 8-digit number that identifies the local authority in Germany. When you first register your address, the form requires you to give this number, although it is often pre-printed.

If not, ask at the town hall where you are registering. Most people will not know their Gemeindeschlüssel and you are highly unlikely to need it at any other time!

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Kirchensteuer, or church tax, is a a tax on income in Germany that benefits a church that the payer belongs to. The level of tax depends on the state or Bundesland that you live in.

Payment is made from your wages by your employer to the Finanzamt, therefore the church who benefits is noted on the Lohnsteuerkarte.

For the main churches, the Kirchensteuer is an important form income. They do, however, use this to provide services to the community which in other countries may be charged for separately.

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Einkommensteuer is a form of tax that is paid on income in Germany.

One of the main forms is Lohnsteuer which is taken directly out of your wages, but other forms of income such as dividends, rent, interest and some pensions are also taxed in this way.

There is a Freibetrag which is the amount you can earn without paying tax on it. How much this is depends on your tax class.

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The Lohnsteuerkarte is an A5 piece of card that you receive when you first register in Germany.

The card contains your name and address, but also your tax class, the number of children you have and your confession.

When you start work, it is important to give it to you employer as soon as possible, so that the tax can be deducted from your wages correctly.

If you leave your job during the year, the card is returned to you with a printout of the tax paid. Otherwise, at the end of each year you receive the printout from your employer to enable you to complete your tax return.

To hear a simple explanation and a short discussion in German, listen to the podcast:

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Disclaimer: this podcast is a simple explanation for non-native speakers.  For tax advice, please contact a Steuerberater.