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Digital nomad taxes in Germany: Which should I pay?
Be part of one of Europe’s strongest economies and learn how to pay your taxes as a digital nomad in Germany.
A digital nomad in Germany has a series of taxes that must be declared depending on their residency status. Understanding the German tax system is essential to ensure you are up to date with tax payments, but it requires special attention due to its rigor.
In this article, we will dive into the world of German taxes for nomads who have decided to settle in the country for a season. We will look at how taxes work for this sector, which law governs them, and if you have any options for tax benefits.
Discover with us one of the strongest economies in Europe and embark on the adventure of working remotely in Germany.
How do taxes work for a digital nomad?
The taxes for a digital nomad in Germany depend on whether you obtain fiscal residency in the country. Let’s explain this in more detail:
- Tax resident: You are considered a tax resident if you stay in Germany for more than 183 days. In this case, you must declare all your income, both within and outside the country.
- Non-resident: If your stay is shorter than this period, you are not required to pay taxes on income earned from abroad.
Which law regulates taxes for digital nomads in Germany?
The German tax code (AO – Abgabenordnung) governs how tax procedures, rights, and obligations of taxpayers are managed.
There is no specific law for remote workers, meaning taxes for a digital nomad in Germany are subject to the same regulations as any other tax resident.
The main laws applied to citizens with tax residency in the country are the income tax law and the value-added tax (VAT) law.
To file these taxes, you will need to do so at the State Finance Office (Finanzamt) in your city. This is where you can register as a freelancer and obtain your tax number to file your returns, which can also be done online via the Elster portal.
When should I start paying taxes in Germany?
As mentioned in previous sections, the obligation to pay taxes in Germany for a digital nomad starts when you acquire fiscal residency, i.e., when you reside for more than 183 days.
Additionally, if you have applied for the digital nomad visa for Germany, you can reside in the country for up to three years. To obtain it, you need to meet some requirements: Have remote work with an income of at least $1,535 (€1,400), have a pension plan if you’re over 45 years old, and a residence in a German city.
Once you have the visa and residency, you will need to register with the German Tax Authority to meet your tax obligations.
Tax Benefits for Digital Nomads in Germany
The tax benefits you can access as a digital nomad are the same as any other type of worker in the country since the German government has not designed a specific fiscal advantage program for remote workers. The most common are:
- VAT exemption: For small businesses with earnings below $24,113 (€22,000) in the first year and $54,803 (€50,000) in the second year.
- Deductions: For expenses related to your professional activity, such as renting a coworking space, purchasing computer equipment, or part of your rent if you work from home.
- Exemption from business tax: For freelancers in creative fields like programmers, graphic designers, writers, or teachers.
- Double taxation treaties: Avoids paying taxes twice on the same income.
How much do I need to pay in taxes in Germany?
The main taxes for a digital nomad in Germany are governed by income tax, value-added tax, and professional activity tax (only for some sectors). Let’s go into more detail and explain how they work.
Income Tax (Einkommensteuer)
This is one of the most important taxes in the country, progressive in nature and applies to income from various sources, such as salaries, investments, rental income, and other economic benefits. Here are its rates:
- Exemption: For income up to $11,955 (€10,908).
- Rate of 14% to 42%: For income from $11,955 to $68,843 (€10,909 to €62,810).
- Rate of 42%: Income between $68,843 and $304,514 (€62,810 – €277,825).
- Rate of 45%: For income above $304,514 (€277,825).
Value Added Tax (Umsatzsteuer / VAT)
If you have a small business, you might be exempt from this tax, as mentioned earlier. The general rate is 19%, and the reduced rate is 7%. If you sell products or digital services and have earnings above $24,113 (€22,000), you will need to add this tax to the final price in your invoices.
Professional Activity Tax (Gewerbesteuer)
This type of tax in Germany only applies if you are a digital nomad registered as a freelancer with commercial activity: Selling products online, dropshipping, or affiliate marketing.
The rate applied will depend on the municipality, ranging from 7% to 17%, with an exemption for the first $26,853 (€24,500) of income.
Double Taxation and Treaties with Germany
In addition to the taxes we have detailed, Germany has double taxation agreements with more than 90 countries that regulate where you should pay taxes, how to obtain credits or exemptions, and what types of income are covered.
Some of these countries are: Spain, Mexico, Argentina, Chile, Colombia, the United States, Canada, Brazil, and the United Kingdom. Therefore, if your tax residency is in any of these countries but you are earning income from Germany, you can avoid paying taxes twice on the same earnings.
Where to get advice before paying taxes as a digital nomad in Germany?
The best option, if it’s your first time filing your annual tax return in Germany as a digital nomad, is to do it through specialized advice in this sector. The companies we present below have online platforms to facilitate communication from anywhere.
| Consultancy | Features |
|---|---|
| Nomad Tax | They offer services such as tax optimization, risk management, and financial planning. |
| Leonardo Deutsch Gestoría | They handle tax returns and ensure compliance with local regulations. It provides a calm and scenic setting. |
| VivirEnEuropa | They provide support in taxation and accounting in any European country, including Germany. |
Specialized tax consultancies for digital nomads in Germany.
How to connect to the internet as a digital nomad in Germany
Do you know about Holafly’s monthly plans? When you try working remotely with them, you will notice the difference because they guarantee the fastest, most stable, and secure 5G coverage in the entire country.
We understand the importance of having excellent connectivity in Germany to carry out your online work without interruptions, schedule video calls, download large files, or connect multiple devices simultaneously. If you purchase the unlimited plan, you will enjoy all these advantages, including the ability to connect multiple devices at once.
Important: If you are a frequent traveler and want to stay connected without worrying about expensive roaming or looking for a new SIM at every destination, Holafly’s subscription plans are for you. With a single eSIM, enjoy internet in more than 160 countries for a fixed price and no surprises on your bill. Travel without limits and connect easily and securely! 🚀🌍
On the other hand, for short stays, you can also get Holafly’s eSIM for Germany, with unlimited data only for the days you need it.
Real case: Paying taxes as a digital nomad in Germany
We want to share the real case of a Spanish web content writer named Laura. She tells us that she has worked remotely from several places around the world until she decided to settle in a coliving space in Berlin in 2023.
What was initially supposed to be a short stay turned into a two-year stay, during which she became a tax resident and, therefore, sought the help of an advisor to learn about the taxes she needed to declare. These are the steps she took:
- She registered as a freelancer with a liberal profession at the Finanzamt in Berlin.
- She registered her address at the registration office (Anmeldung).
- She filled out the tax identification questionnaire at the Finanzamt.
- She opted for the small taxpayer scheme since her income was below $24,113 (€22,000).
- She declared her taxes through the official German government portal for tax procedures with the help of an advisor.
Frequently Asked Questions about Taxes for Digital Nomads in Germany
When you live in the country for more than 183 days a year.
Only if you are a tax resident, in that case, you will need to declare all your global income. Otherwise, if you reside in the country for less than 183 days, you will only be required to declare income generated within Germany.
It is a scheme that exempts freelancers with small earnings, below $24,113 (€22,000), from charging VAT on their invoices.
Yes, you need to register at the Finanzamt in the German city where you live, and they will provide you with a tax number, necessary to issue invoices and file your tax returns.
This will depend on the type of tax. For example, VAT is monthly or quarterly, depending on your income level. On the other hand, income tax is filed annually.
