American Expats in Germany
As a US citizen or Green Card holder living in Germany, you’re usually dealing with tax rules in two places. The US taxes based on citizenship, not where you live, so moving to Germany doesn’t end your US filing requirements.
The good news is that many expats don’t pay full tax twice on the same income, as long as they file correctly and use the right relief provisions.
This 2025 tax guide covers the basics most people actually need: when you’re required to file, how the common expat tax tools work, and what foreign account reporting can look like once you start using German bank accounts.
Do I have US tax filing obligations?
More often than not, yes. If you live in Germany, you still need to check each year whether you’re required to file a US tax return. Living abroad does not cancel your US filing requirement.
Here’s a table so you can see the filing triggers:
| Situation (2025 tax year) | Common filing trigger |
| Single filer (general threshold) | US$15,750 |
| Married filing jointly (general threshold) | US$31,500 |
| Self-employed (net earnings) | US$400 |
One detail that catches people off guard is currency conversion. Your German income is earned in euros, but the IRS looks at everything in US dollars. You can use the IRS yearly average exchange rate for most income.
If you meet the threshold, you will need to file Form 1040 and report your worldwide income. That includes salary from a German job, freelance income, dividends, interest, rental income, and anything else you earned during the year, no matter where it was paid.
Additionally, Americans abroad usually receive an automatic extension to June 15 to file. But it’s important to separate “filing” from “paying.” If you end up owing US tax, payment is due by April 15 to avoid interest. And even if you expect to owe nothing after exclusions or credits, you still need to file if you’re over the threshold.
| Typical due date | Notes | |
| US income tax return (Form 1040) | April 15 | Standard US Tax deadline |
| Automatic expat filing extension | June 15 | Filing extension, not an automatic payment extension |
| Extension request (Form 4868) | By April 15 (to extend) | Extends filing to October 15 |
| Extended filing deadline (with Form 4868) | October 15 | Common “final” deadline for many expats |
| Common “final” deadline for many expats | Common “final” deadline for many expats | Extends filing to October 15 |
📌 Note: Interest from unpaid taxes accrues from April 15, even if an automatic June 15 filing extension applies.
What are some ways I can avoid double taxation? (FEIE & FTC)
Most American expats in Germany lean on one of two main tools to avoid being taxed twice on the same income: the Foreign Earned Income Exclusion (FEIE) or the Foreign Tax Credit (FTC).
The FEIE lets qualified expats exclude up to US$130,000 of foreign earned income for 2025. This is typically salary or self-employment profit. It does not include dividends, interest, capital gains, pensions, or rental income.
To use the FEIE, you have to qualify based on living abroad, usually through either:
- a physical presence test (enough days outside the US), or
- a residency-based test tied to Germany being your main home for the relevant period.
The FTC works differently. Instead of excluding income, it gives you a credit for German income taxes you paid on income that the US also taxes. Because German income tax rates are often higher than US rates, the FTC can often reduce US income tax on that same income down to US$0.
Do I need to report my foreign accounts?
Generally, yes. Even when your US income tax ends up at US$0, foreign account reporting rules can still apply. This is where many expats get penalties, not from income tax, but from missed reporting.
The two big ones are Form 8938 (FATCA reporting) and the FBAR (FinCEN Form 114). They overlap, but they’re not the same thing, and you can end up needing one, the other, or both.
Form 8938 (FATCA reporting) is filed with your US tax return if your foreign financial assets exceed certain thresholds. For expats, the thresholds are higher than for people living in the US. In your draft, the single-filer threshold is generally:
- US$200,000 on the last day of the year, or
- US$300,000 at any point during the year
“Specified foreign financial assets” can include foreign bank and brokerage accounts, certain foreign retirement accounts, cash-value life insurance policies, and some interests in foreign entities.
The FBAR is separate and has a much lower threshold. If the combined value of all your foreign financial accounts exceeds US$10,000 at any point during the year, you generally need to file it. This is not filed with Form 1040. It’s submitted online to the US Treasury.
German Tax Residency & Rates
Germany taxes its residents on worldwide income and non-residents only on German-source income.
You usually become a German tax resident if you either have a permanent home available in Germany or you spend more than about 183 days in Germany in a year. It’s also worth keeping in mind that residency is based on your living situation, not your citizenship. So you can be a US citizen and still be fully tax resident in Germany if your life is set up there.
Once you’re a resident, you’re expected to file German taxes and report your income broadly. Germany may later exempt or credit certain foreign income under treaty rules, but it still generally has to be declared first, then handled the right way on the return.
German income tax is progressive. Roughly the first €12,000 of income is tax-free, and then rates start around 14% and rise gradually. At higher income levels, the rate can reach about 42%, with 45% applying to very high incomes.
Married couples can file jointly, and this often results in a lower overall tax burden compared to being taxed individually, especially when one spouse earns much more than the other.
There are also add-on taxes that can apply depending on your circumstances:
- Some higher earners pay a solidarity surcharge of 5.5% on their income tax.
- If you’re registered with a church in Germany, there may be church tax added, typically around 8% to 9% of your income tax.
German Social Contributions
Germany’s social contributions are a significant cost; roughly 18.6% of your wage goes to the state pension program and about 14.6% goes to public health insurance, and these are generally split 50/50 between you and your employer. On top of that, smaller percentages fund unemployment insurance and long-term care insurance.
These contributions only apply up to certain income ceilings. So above a set salary level, you don’t keep contributing additional amounts to some of these programs, even if your income continues to rise.
These payroll contributions are not counted as foreign income taxes for US tax purposes. That means you typically can’t claim a US foreign tax credit for German pension or health insurance contributions.
Instead, to avoid paying social security-type taxes twice, the US and Germany rely on a Totalization Agreement that helps ensure you’re paying into only one country’s system at a time.
Health Insurance (Public vs Private)
Most expats in Germany end up covered by Germany’s statutory public health insurance (GKV) if they work for a German employer. It’s mandatory for employees earning under about €77,000 per year. Premiums are about 14.6% of salary (plus a small supplemental rate), and your employer usually pays half.
The public system covers most medical needs with relatively low co-pays, and one major benefit is that it can allow free co-insurance for non-working spouses and children.
If your income is above the threshold, or you’re self-employed, you can choose private health insurance (PKV). Private premiums are based on your age, health, and coverage level, not your income. And each family member generally needs their own policy, which can change the costs quickly.
Make US taxes easier while living in Germany.
Let our tax specialists guide you throughout the process.
Pensions and the Totalization Agreement
When you work in Germany and pay into the system, you earn German pension credits. At the same time, as a US person you may be thinking about whether you’re still paying into US Social Security, and whether you’re accidentally paying into both systems.
This is exactly what the US-Germany Totalization Agreement is designed to prevent. The main goal is to make sure you don’t pay into two social security systems on the same earnings.
Here’s how it often works:
- If you’re contributing to the German pension system through a German employer, you generally do not pay US Social Security tax on that same income.
- If you remain on a US payroll for a temporary assignment in Germany, you can often stay covered by US Social Security and be exempt from German social security contributions. This typically involves getting a certificate of coverage to prove which system applies.
- For self-employed people, the agreement can also prevent double social security taxation. If you’re paying into Germany’s system for that income, you generally wouldn’t pay US self-employment Social Security tax on the same earnings.
The agreement also helps with eligibility for benefits if your career is split between the two countries. If you don’t have enough credits in one country to qualify for a pension on its own, your years in Germany and the US can be added together for eligibility purposes. Each country then pays a pro-rated benefit based on what you contributed there.
US-Germany Tax Treaty
The income tax treaty between Germany and the US is there to help prevent you from being taxed twice on the same income. It does this by laying out which country gets the first right to tax different types of income, and how the other country is supposed to provide relief when both countries have a claim:
- Wages and salaries are usually taxed where you perform the work. So if you live and work in Germany, Germany is typically the first country taxing your wages.
- Investment income, like dividends and interest, can sometimes be taxed by both countries, but the treaty limits how much extra tax can be taken, such as by capping withholding on cross-border payments.
- Capital gains on personal property like stocks are often treated as taxable only by your country of residence, which would generally mean Germany if you’re living there.
The treaty includes a “saving clause,” which basically says the US can still tax its citizens as if the treaty didn’t exist. So living in Germany doesn’t stop your US filing obligations. You still file your US return and typically rely on the Foreign Earned Income Exclusion or the Foreign Tax Credit to prevent double taxation.
Most situations do not require you to make a special treaty claim on your US forms. You’re usually implementing the treaty’s intent just by reporting everything properly and using the right exclusions or credits. The treaty becomes more important when you have unusual income types, cross-border withholding issues, or situations where both countries might reasonably argue they have the main taxing right.
Self-Employed Expats and Business Owners
On the German side, you report your business profits and pay German income tax on that income. Depending on what you do and how much you earn, you may also need to register for VAT and charge 19% VAT on your services once you’re above the small-business exemption rules.
You’ll also handle your own insurance setup. That means arranging health insurance yourself and covering the full cost, whether you choose public coverage or private insurance. Some freelancers are required to pay into the German state pension system, while others may have more flexibility depending on their profession and how they’re classified.
And since no employer is withholding taxes from your pay, many self-employed people make advance payments during the year and then file an annual German tax return to settle the final amount.
On the US side, you still report your foreign business income on your US tax return. You can use the FEIE and/or foreign tax credits so that you owe little to no US income tax on that income, especially if German taxes are already high enough to offset the US tax. Also, thanks to the totalization agreement, if you’re paying into German social security, you generally don’t owe US self-employment Social Security tax on those same earnings.
But if you set up a German corporation, like a GmbH, or certain partnership structures, the US may treat that as a foreign entity you own. That can trigger additional IRS forms, such as:
- Form 5471 for certain foreign corporations
- Form 8865 for certain foreign partnerships
- and other forms depending on ownership, control, and activity
Because of that, many expat business owners try to keep things simple, or they get professional advice before choosing a legal structure. It’s also important to remember that business bank accounts count too, so they may need to be included in FBAR and FATCA reporting if you meet the thresholds.
FAQs
Do I have to file a German tax return if my German employer already withholds tax from my paycheck?
Not always. Many employees aren’t required to file because tax is withheld from wages, but you must file if you fall into Pflichtveranlagung cases (for example, certain untaxed side income, multiple employers/tax class issues, or certain wage-replacement benefits).
What is a German tax ID (Steuer-ID), and is it the same thing as my US SSN?
How are US retirement accounts (401(k), IRA, Roth IRA) treated while I live in Germany?
Are German ETFs or mutual funds a problem for US expats because of PFIC rules?
If I have a joint German bank account with my non-US spouse, do I still need to report it to the US?
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