Getting started in Germany

Register yourself (Anmeldung)

In Germany, it is compulsory to register at the "residents’ registration office" (Einwohnermeldeamt) within two weeks after arrival. When moving to another place, you have to register again at the new address (unless the old address stays active and the move is only temporary). While there may a be fine if you forget to register, many registration offices are relatively forgiving, but you should not count on it.

You will need to present the following documents:

• Your passport or a recognized national picture ID.

• The landlord's confirmation (Wohnungsgeberbestätigung) about a rental agreement. You and your landlord need to complete the Wohnungsgeberbestätigung together. If you do not receive such a confirmation, you can still register, but you will need to provide such a confirmation within two weeks. If you sublease a room in a shared flat and have a sublease contract with the main tenant, this person will be your landlord who needs to fill in the form with you. If you stay with a friend or family, they will be able to sign the document as they provide you with accomodation. Note that a lease agreement is neither needed nor accepted, just a signed Wohnungsgeberbestätigung.

This registration at the town council will trigger the following:

• You will be able to receive government letters.

• You will be registered with the Federal Tax Office. This means that you will receive your German Tax ID (Steueridentifikationsnummer) number by post within two weeks.

• The German TV License office gets your address and contacts you in order to pay your Rundfunkbeitrag of ca. 56 EUR per quarter (compulsory, no way to escape – unless you live in shared flat, and someone else is already paying this fee).

Sign up for an online tax account (Elster)

While this is not immediately required, it is a good idea to sign up for a free online account so you can file your taxes electronically. For this, you need to go to this website and create an account by choosing the default option based on a certificate file (Zertifikatsdatei). You will need your Tax ID (Steueridentifikationsnummer) that was sent to you after you registered in Germany. After registering, you will need to confirm your email address, after which the activation code will be sent to you via regular mail to your German address. When you receive it, you can activate your account and download the certificate file, which you will need in the future to login, so make sure that you properly backup this file.

Note that there are two distinct numbers:

• The Tax ID (Steueridentifikationsnummer) which is unique to every person and should not change over your lifetime. In the future, this is supposed to be the only identifier needed.

• The Tax Number (Steuernummer) is a number that is assigned by the currently responsible department of your tax office (and its local branch). This number changes whenever your tax case is moved to a new responsible department. If you arrived newly in Germany, you will receive this number after filing your first taxes.

Open a bank account

There are many options for bank accounts in Germany and it is also completely acceptable to open a second account or switch at a later point. Many accounts with local banks have higher fees and less feasibility for online banking, which is the reason why I generally recommend online accounts. Depending on the account, you can avoid fees or get additional perks if you have regular monthly deposits. Technically, it is often not required that they come from your employer, but they could also come from one of your other accounts or from the account of a friend (check precise conditions). My top recommendations are the following:

• DKB - Deutsche Kreditbank* (15 EUR bonus). This is hands-down the best German bank account on the market. There is no monthly fee and one receives a credit card that allows free cash withdrawals on almost all ATMs in the EURO zone. If you pay with the credit card outside of Europe or want to withdraw cash, there is a fee which you can avoid if you are "Aktivkunde", which requires you to have monthly deposit of at least 700 EUR per month. This deposit can come from your salary, but could also be a bank transfer from another of your bank accounts.

• N26*. This is a modern app-only bank account that is great as a free backup-account and does not have any monthly fees. It also has an English interface, but it does not have a German type debit card (Girocard), but

Please make sure to check the terms and conditions, which may change from time to time. You should make sure that you keep each account fee-free by satisfying the activity requirements. In case of DKB, it is typically worth it to ensure that you get the status "Aktivkunde".

If you already have a EUR account in Europe, you do not necessarily need a German bank account as employers are able and required to accept any SEPA bank account to deposit a salary. However, in many situations it will be a hassle to convince them to accept a foreign account (German bureaucrats...) and there some advantages of having a German account. It enables you to build a German credit score with the German Schufa.

Get a phone and a internet plan

For both, phone plans and internet plans you have many different options. While the monthly fees are higher than in some other European countries, you can expect to get a decent phone plan with internet for 10-20 EUR per month and a good internet plan for 20-25 EUR per month.

Choose your health insurance

Everybody with residence in Germany is required by law to have proper health insurance. You typically have the following two options:

• Public insurance (Gesetzliche Krankenversicherung). There are a large number of public insurances that all provide roughly the same services, but can differ slightly (+/- 30 EUR per month) in monthly cost and certain additional perks (cashback when taking care of yourself, additional coverage). If you are regularly employed and earn below certain limits (Versicherungspflichtgrenze, ca. 60k EUR per year), you are forced to take out public insurance. If you are signed up for the default public insurance by your employer, you can still switch whenever certain fees are increased or after a year has passed. There is no danger of losing insurance cover during the switch process. I typically recommend to choose the cheapest available health insurance that also covers the professional cleaning of your teeth (Professionelle Zahnreinigung). If you require certain medication, vaccinations or other coverage, it is worth it to compare the available options. You can find a lot of information on this website (in German).

• Private insurance (Private Krankenversicherung). Private insurance is only an option for relatively high paid employees (Versicherungspflichtgrenze, ca. 60k EUR per year), self-employed business owners or civil servants (Beamte). While the insurance premium is lower for young people (300-400 EUR), the monthly cost increases significantly with age. At the same time, it is rather difficult to switch back from the private to public system. The main advantage of private insurance is that they may cover certain special treatments and that one has significantly shorter waiting times for appointments.

Private retirement savings

In contrast to many other countries (like US, UK, Australia etc.), Germany does not have simple retirement savings products that would allow you to invest into the stock market with low fee index funds with a part of your pre-tax salary. There are products that advertise to enable you to do some of that, namely Riesterrente and Rüruprente, but in the end both products are rather inflexible and come with high fees due to the insurance wrapper. In particular, these insurances need to be converted to an annuity at retirement age, so Generally, Riesterrente could be attractive for families with many children or individuals/families with very low income, but even in this case one should just invest the minimal amount required to receive the maximal government co-contribution. The only other advantage of these products is that you get to keep them in the case of a bankruptcy, but in most other situations you will likely be better off when investing yourself longterm into the stock market.

Employers regular offer their own company pensions (called Betriebsrente), which also generally performs worse than the stock market. However, many employers match some or all employee contributions, so that it is actually still an attractive investment. Distributions will be taxed as income after retirement and it is important to be aware that the current law also requires that a certain percentage (ca. 15% for monthly company pensions of above ca. 160 EUR) goes towards health insurance cost.

From the German perspective, one of the best choices of saving for retirement is investing yourself into broadly diversified worldwide low-fee ETFs without selling. In this case, one only pays a tax of 17.5% (plus solidarity surcharge) on dividend distributions or Vorabpauschale as explained here. Generally, we recommend the following options:

1. Reinvesting ETFs ("thesaurierend"). These ETFs reinvest all dividends, so there are no taxes on dividends, as they are not received by German tax payers. However, Germany introduced a certain pre-tax on fictitiously realized profits, as explained here. This tax is generally very low, but it may be quite a hassle to keep track of it (as it increases the cost basis, so when selling one may need to have the record of all German tax statements since buying, which may be for several decades if one invests until retirement). For expats moving between different countries, this may be particularly tricky, as those tax payments may not be recognized by other countries if one sells the respective ETF, when one is not a tax resident of Germany anymore. Finally, if the ETF replicates the index by investing directly in the underlying companies (rather than using a SWAP contract), the internal dividend distributions are likely subject to source taxes (e.g., 15% for US dividends received in a ETF domiciled in Ireland). We therefore usually recommend low-cost SWAP ETFs when choosing this option.

2. Distributing ETFs ("ausschüttend"). These ETFs pay out all dividends to the investors, which will be taxed in Germany at 17.5% (plus solidarity surcharge) leading to a total of ca. 18.6%. In most cases, this completely avoids the Vorabpauschale, which makes it much easier for expats moving between countries to keep their taxes in order (as they do not need to keep records of taxes paid many years ago, which may only be recognized in Germany). Moreover, if one invests in US-ETFs one can even credit the source tax against the German tax, so that the effective German tax is reduced to only ca. 2.6%, as explained here. This choice is also much better if you ever intend to move to the US, as owning non-US ETFs as US tax resident has significant disadvantages, as explained here.

We generally recommend option 1 to people who intend to stay in Germany forever and do not want to deal with taxes themselves. In this case, it is best to invest in reinvesting ETFs within a German brokerage account. If you intend to move to another country later on (in particular, if this includes the US), option 2 will likely be a much better choice - for example, by using an international brokerage accounts, such as Interactive Brokers.