Number format: this calculator uses German notation throughout — a comma is the decimal separator and a dot groups thousands. “1.234,56” means one thousand two hundred thirty-four euros and fifty-six cents. The figures come from German tax law, so they are shown the way German authorities write them.
Finance glossary
Each term first in a single sentence, then on its own page in plain language, in technical detail and with a worked example — always with the legal basis. For the detail behind the figures in the calculators.
59 terms
A
- Advance lump sum (Vorabpauschale) Annual advance taxation of accumulating funds, so that tax arises even without a distribution.
- Annual escalation (Dynamik) An annual percentage increase in the savings instalment, so that you put more aside as income grows.
- Annual gross wage (Bruttoarbeitslohn im Jahr) The total wage for a calendar year, as shown in line 3 of the wage tax certificate (Lohnsteuerbescheinigung).
- Assumed return (Renditeannahme) The annual growth assumed for an investment — an assumption for the calculation, not a promise about the future.
B
C
- Child allowance count (Kinderfreibeträge) A figure from the ELStAM records; it does not reduce the wage tax itself, only the solidarity surcharge and church tax.
- Childless surcharge in long-term care insurance (Kinderlosenzuschlag) Childless people aged 23 and over pay 0,6 points more for long-term care insurance, with no employer share.
- Children in total Anyone who has ever had a child pays no childless surcharge to long-term care insurance, for life.
- Children under 25 For each child from the second to the fifth, the long-term care contribution falls by 0,25 contribution rate points.
- Choice of tax class (Steuerklassenwahl) It does not change the tax owed for the year, only the monthly amount withheld.
- Church tax rate (Kirchensteuersatz) Pre-filled with the rate of the state selected — eight percent in Bavaria and Baden-Württemberg, nine elsewhere.
- Civil service medical allowance rate (Beihilfebemessungssatz) The share of medical costs borne by the employer; the remainder is covered by private insurance.
- Company car (Firmenwagen) A company car you may also use privately is a benefit in kind, taxed and charged with contributions like salary.
- Compounding period (Verzinsungsperiode) How often per year interest is credited — the more often, the stronger the compounding.
- Contribution assessment ceiling (Beitragsbemessungsgrenze) The pay up to which social security contributions are calculated — anything above it is contribution-free.
D
E
- Effective annual rate (effektiver Jahreszins) The rate that includes every cost — the honest figure for comparing loans.
- Employment expenses (Werbungskosten) Expenditure incurred to earn, secure and maintain your wage — commuting, training, work equipment and the like.
- Experience step (Erfahrungsstufe) Within a pay grade the basic pay rises with length of service, in eight steps.
F
- Federal state of the workplace (Betriebsstätte) In the wage tax deduction the church tax rate of the employer's location applies, not that of your home address.
- Fixed-rate period (Zinsbindung) The period for which the nominal rate is fixed; afterwards the residual debt needs follow-on financing.
- Flat-rate tax on investment income (Abgeltungsteuer) A flat 25 % tax on interest, dividends and price gains; the bank withholds it, which settles the tax.
- Follow-on financing (Anschlussfinanzierung) Financing the remaining debt once the fixed-rate period ends — at whatever rate applies then.
G
I
- Income limit for parental allowance Above 175.000 euros of taxable income in the previous year the entitlement to Elterngeld lapses — for couples the combined income counts.
- Income splitting for spouses (Splittingverfahren) Jointly assessed spouses are taxed on half of their combined income — and pay twice the tax on it.
- Income tax prepayment (Vorauszahlung) Quarterly payments towards the not-yet-assessed tax for the current year.
- Initial repayment rate (anfänglicher Tilgungssatz) The share of the loan repaid in the first year — together with the nominal rate it fixes the instalment.
- Insurer-specific supplementary rate (Zusatzbeitrag) Every health insurer sets it for itself; the published average rate is only a default.
L
M
- Marginal and average burden (Grenz- und Durchschnittsbelastung) The average burden is the share deducted from your whole pay; the marginal burden, the share of each additional euro.
- Minijob (marginal employment) Employment up to 603 € a month: almost free of tax and contributions for employees; the employer pays flat rates.
- Minimum assessment base (Mindestbemessungsgrundlage) The minimum amount on which voluntarily insured members pay contributions — even where the profit is lower.
- More-favourable test (Günstigerprüfung) Child benefit or child allowances: the tax office takes whichever is better of its own motion, never both.
N
O
P
- Parental allowance (Elterngeld) Replaces part of the earned income lost after a birth: 65 to 100 percent of the standardised net pay beforehand.
- Pay grade (Besoldungsgruppe) Ranks a post or military rank by its level and thereby fixes the basic pay.
- Payment protection insurance (Restschuldversicherung) Insurance that repays the loan on death or unemployment.
- Pension and insurance contributions (Vorsorgeaufwendungen) Contributions to old-age, health, long-term care and unemployment insurance, deductible as special expenses.
- Profit (cash-basis accounts) Receipts minus business expenses — the figure on which tax and contributions are calculated.
- Progression clause (Progressionsvorbehalt) Wage replacement benefits are themselves tax free, but they raise the rate applied to the rest of your income.
- Purchase costs (Erwerbsnebenkosten) The costs on top of the purchase price: transfer tax, notary, land registry and any agent, usually 9 to 15 percent.
R
S
- Salary sacrifice (Entgeltumwandlung) Part of your gross salary goes into a company pension, with tax and social-security relief.
- Saver's allowance (Sparer-Pauschbetrag) Investment income up to 1.000 € a year stays tax-free, up to 2.000 € for jointly assessed spouses.
- Savings target (Sparziel) A fixed target amount at a given date — what is sought is the monthly instalment that gets you there.
- Second job (Nebentätigkeit) A second job is taxed in tax class 6 — the wage tax withheld there is only a prepayment.
- Single-parent relief (Entlastungsbetrag für Alleinerziehende) An allowance of 4.260 € a year for single parents, plus 240 € for each further child.
- Small-business rule (Kleinunternehmerregelung) Stay within both turnover limits and you may invoice without VAT, but you lose the input VAT deduction.
- Solidarity surcharge (Solidaritätszuschlag) A 5,5 % surcharge on income or wage tax; since 2021 only high incomes pay it.
T
- Tax class (Steuerklasse) Assigns the wage tax deduction to your family situation and determines which allowances are already taken into account each month.
- Trade tax multiplier (Gewerbesteuer-Hebesatz) The percentage by which your municipality multiplies the tax base amount.
- Transition zone (Übergangsbereich, “Midijob”) Monthly pay between 603,01 € and 2.000 €: employees pay reduced social contributions yet earn full pension entitlements.
- Type of employment (Beschäftigungsverhältnis) Determines social security liability as a whole — civil servants, judges and soldiers pay neither pension nor unemployment contributions.
V
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