Generally fellowships are tax exempt as long as certain conditions are fulfilled.
- The fellowship must be paid out of public funds or by a public or non-profit organization (as far as this is recognized by German law).
- The fellowship must be granted with the goal of supporting research, academic or artistic education or further training.
- The fellowship does not exceed the amount necessary to complete the research project or to pay for the education program and daily living expenses. The fellowship is granted according to the guidelines of the granting agency.
- The fellowship does not require any services to be made in return or any form of employment on the part of the recipient.
Tax exempt status also means no social insurance contributions are paid.
If you are working at the University with an employment contract with the University of Heidelberg, your income will be taxed.
Income taxes are deducted directly by the employer and paid to the state. The amount of income tax deducted depends on income, marital or family status and tax bracket.
Tax Card or Certificate for Tax Deduction
Since January 2013 we have in Germany electronic tax cards and all you'll have to do is to communicate your tax identification number to your employer. You receive this tax identification number, which has lifelong validity, by mail automatically after registering your place of residence at the residency registration office (Bürgeramt). If you live outside of Heidelberg, a different tax office may be responsible for you (To search for the appropriate tax office see related information). You must inform the tax office directly about any changes to your tax card.
At the end of every calendar year, you can apply for an income tax adjustment through your local tax office. By submitting an income tax return, it may be possible to receive a partial reimbursement of the income taxes that were deducted from your salary throughout the year. The necessary forms can be obtained directly from the tax office. In some cases it can be worth it to pay the fees for a tax accountant to do the tax return for you (For information about finding a suitable tax accountant see right column).
In order to prevent foreigners from paying taxes both in Germany and in their home country, Germany has entered into a so-called Double Taxation Convention with many countries. The convention establishes the country in which the taxes must be paid. If you remain in Germany for less than half a year (183 days), your income will be taxed in your home country if you have worked for a foreign employer and if the Double Taxation Convention gives the right of taxation to your home country. If one of these conditions does not exist in your case, your income will be taxed in Germany.
Germany has entered into an agreement with some countries which states that University professors and researchers who come to Germany for a maximum of two years in order to work at a public research facility can pay their taxes in their home country. Details about such issues are available in the Regulations regarding the Double Taxation Convention, which exist for countries in the EU as well as for some other countries.
The state also deducts church taxes along with income taxes (approx. 9% of income tax) for the large Christian churches. For that reason you have to indicate your religious affiliation when registering your place of residence at the residency registration office (Bürgeramt). The taxes will be deducted directly from your income.