Living in Germany: tax residency, 2026 tax brackets, income splitting and inheritance tax

You are considered a German tax resident if you have a domicile in Germany or if you reside there for more than six consecutive months. In this case, you are taxed without limitation. The 2026 tax brackets exempt the first €12,348 and increase to €45; married couples filing jointly apply the tax splitting rule. This page describes these rules based on official German legislation and then refers to France for information covered by the tax treaty.

German resident: accommodation, or more than six consecutive months

The German Tax Code (Abgabenordnung) establishes two criteria. Domicile (§ 8): you have it where you have accommodation under circumstances that suggest you will keep and use it. Habitual residence (§ 9): a continuous stay of more than six months constitutes habitual residence from its first day. Short interruptions do not count. The exception concerns exclusively private stays (visits, rest or leisure, treatment, or similar private purposes) that do not exceed one year. Regarding duration, the German text states "mehr als sechs Monaten" (more than six months), while the official English translation published by the Federal Ministry of Finance states "not less than six months' duration": the page follows the German text, and the exact wording should be verified with the source.

The German Income Tax Act (EStG, § 1) reflects this. If you are domiciled or habitually resident in Germany, you are taxed without limitation. If you are neither, your tax liability is limited to income from German sources. If France also considers you a resident, the 1959 tax treaty, in Article 2, § 4 b), differentiates between the following: permanent home, center of vital interests, habitual residence, nationality, and mutual agreement. Our page on the treaty details these rules.

The 2026 scale: €12,348 exempt, then a progression up to €45,130.

Section 32a of the EStG sets the rate "ab dem Veranlagungszeitraum 2026" by taxable income brackets.

The first two zones follow formulas, not a fixed rate: the law gives (914.51 • y + 1400) • y and then (173.10 • z + 2397) • z + 1034.87, y and z being fractions of taxable income above €12,348 and €17,799 respectively. Taxable income is rounded down to the nearest euro, as is the tax.

Splitting. For spouses taxed jointly, the tax is double the tax calculated on half of their joint taxable income (§ 32a, paragraph 5). The text refers to spouses. It makes no mention of other forms of union: this point must be verified on a case-by-case basis.

Solidaritätszuschlag: a neutral zone before the 5.5 %

The solidarity levy is added to the tax. Its rate is 5.5% of the tax base (§ 4 SolZG). It is only due if the tax base exceeds €20,350 in other cases and €40,700 in the cases of § 32a paragraphs 5 and 6 (§ 3 SolZG). Beyond these thresholds, it cannot exceed 11.9% of the difference between the tax base, less the tax under § 32d paragraphs 3 and 4 EStG, and the exemption threshold (Freigrenze) applicable according to § 3 paragraphs 3, 4, and 5 SolZG (§ 4 SolZG). This cap applies in the tax brackets below the threshold. The consolidated law page does not indicate the year to which these amounts apply: the example below applies them to 2026, an assumption to be verified with a dated official source.

Capital income: 25 %, or the scale if it is cheaper

Section 32d of the German Tax Act (EStG) sets the tax on capital income at 25 %. Foreign tax is creditable up to a maximum of 25 % per taxable capital income, within the limit of German tax liability. Upon request, your capital income can be included in the tax brackets if this reduces the tax liability (Günstigerprüfung); this option then applies to all your capital income for the year. An option also exists for the tax brackets to be applied to dividends from a capital company held at least at 25 %, or at least at 1 % with a business activity that has a decisive influence.

For French dividends paid to a German resident, the treaty caps the French withholding tax at 15% of the gross amount (Article 9 § 2). The crediting and refund process is described on our treaty page.

Private capital gains: ten years for real estate, one year for everything else

Section 23 of the German Tax Code (EStG) taxes the resale of real estate within ten years of acquisition. Other assets are subject to taxation within the year of acquisition, or within ten years if the property has generated income for at least one calendar year. Real estate used exclusively as a primary residence is excluded, according to the provisions of the law. Annual gains of less than €1,000 remain tax-exempt. This page does not detail the taxation of capital gains on securities.

Inheritance tax: its classes and allowances

A deceased person, donor, or beneficiary domiciled in Germany ("Inländer") makes the entire estate taxable in Germany (§ 2 ErbStG). German citizens are also subject to inheritance tax as long as they have not resided abroad continuously for more than five years without being domiciled in Germany. In other cases, only assets located in Germany are taxed.

The allowances under Section 16 of the German Tax Law (ErbStG), in the case of unlimited liability:

This page does not address the case of a civil partnership (PACS). For Class I, Section 19 applies 7 % up to €75,000, 11 % up to €300,000, 15 % up to €600,000, 19 % up to €6,000,000, 23 % up to €13,000,000, 27 % up to €26,000,000, and 30 % above that. Class I includes the spouse, children and stepchildren, their descendants, and, for inheritance purposes only, parents and ascendants. Between France and Germany, the convention of October 12, 2006 allocates the right to tax by nature of property and contains a rule based on five years of residence during the previous seven years (Article 4 § 3).

Social security: five branches, one fund chosen by the employee

The CLEISS (Center for European and International Social Security Studies) describes the German social security system for employees: sickness (including maternity), pensions, long-term care, unemployment, and workplace accidents. Each branch is managed independently by a joint committee (unemployment benefits are represented by three parties). Employees choose their health insurance provider at the start of their employment and can change it at most once a year. Pensions are administered by the Deutsche Rentenversicherung (German Pension Insurance), and unemployment benefits by the Federal Employment Agency. The CLEISS report does not cover self-employment, and the rates it publishes are from 2024: this page does not include them.

Married couple residing in France, €140,000 taxable income: numerical example (fictitious profile)

Situation. A fictitious married couple are German tax residents for the year 2026. Their joint taxable income is €140,000. They also receive €10,000 in dividends.

Issue. He wants to estimate German income tax, Solidaritätszuschlag and dividend tax.

Strategy. He applies the splitting: tax on €70,000, doubled. He compares the resulting tax to the €40,700 threshold for the Solidarity Tax (assuming this threshold is applicable in 2026). He applies 25% of the tax due on dividends, without opting for the progressive tax scale. He recalculates with €160,000.

Result. The tax on €70,000 is €18,264, totaling €36,528 for the couple. This amount is below €40,700: no Solidarity Tax (Súritatszuschlag) is due. Dividends are subject to a tax of €2,500 at the 25% rate (%). With €160,000, the tax is €44,928, which is €4,228 above the threshold: the Solidarity Tax is capped at €503.13, compared to €2,471.04 at the full rate. Assumptions: the basis for the Solidarity Tax is the income tax from the tax brackets, and no tax from § 32d paragraphs 3 and 4 is deducted from this basis. The calculation excludes church tax, social security contributions, and the Solidarity Tax on dividends. Profile and amounts are fictitious.

What this page does not cover

Church tax, a possible wealth tax, local property taxation, local investments (accounts, German assurance-vie) and schemes for incoming executives are not covered: their official texts were not read for this page.

What changes depending on your situation

• Your marital status and the form of your union.
• The date of arrival and the length of stay in Germany.
• The nature of your income: salaries, dividends, capital gains, rents.
• The nationality of each member of the household, for inheritance purposes.
• Your belongings that remained in France.

The rule depends on your situation. No results are guaranteed.