2020 in Germany: All of the changes expats need to know about
2020 in Germany: All of the changes expats need to know about
New year, new laws! 2020 is here, and it’s brought a whole shedload of changes to Germany. Here is an overview of the most important changes that are likely to affect you.
Changes affecting workers in Germany
If you’re currently working in Germany, there are a few new things you’ll need to get to grips with over the coming year.
Minimum wage going up
After already going up in January 2019, minimum wage in Germany is going up again - to 9,35 euros per hour or 515 euros per month, as of January 1, 2020. This regulation applies even if you are not subject to a collective bargaining agreement.
Fewer barriers for skilled workers coming to Germany
Responding to Germany’s desperate shortage of skilled workers, the Immigration for Skilled Workers Act becomes law on March 1, 2020. This will allow skilled workers from third countries to come to Germany, as long as they possess professional qualifications, as well as a job offer and German language ability.
Anyone looking for a job or training position in Germany must have the necessary school-leaving qualifications, knowledge of German, and be in a position to pay for their own cost of living (which can be proven with a blocked account).
Higher meal allowance
If you work outside of the office, you can claim a higher meal allowance from 2020 - it will increase from 12 to 14 euros if you work for more than eight hours away. For assignments lasting several days, it will also apply to the dates of arrival and departure and, if you spend at least 24 hours away from the office, the meal allowance increases from 24 to 28 euros.
Higher tax limit for small businesses
The turnover threshold for freelancers and entrepreneurs who wish to apply the small business ruling (Kleinunternehmerregelung) will rise in 2020, from 17.500 euros to 22.000 euros in annual sales. If your turnover exceeds this threshold (or is expected to exceed 50.000 euros in any given year), you must charge VAT (Ust).
Changes to social security
As always, the new year also brings several changes to contributions to social security.
Higher contribution ceiling for pension and unemployment insurance
From January 1, 2020, the maximum income up to which contributions are paid for pension insurance and unemployment insurance will increase from 6.700 to 6.900 euros gross per month in the West, and from 6.150 to 6.450 euros in the East.
Contribution ceiling for health and long-term care insurance goes up
The contribution ceiling for health insurance and long-term care insurance is also going up. From 2020, the income threshold will go up from 4.537,50 euros to 4.687,50 euros per month. The limit for compulsory statutory insurance will also increase to 5.212,50 euros per month. Anyone who earns more than that can take out private health insurance.
Lower contributions to unemployment insurance
On the plus side, for a limited period until the end of 2022, the contribution to unemployment insurance will drop by 0,2 percentage points to 2,4 percent of gross salary. This saving is split equally between you and your employer.
Changes to benefits & Allowances
If you are in receipt of any benefits or allowances in Germany, you can expect your payments to go up in 2020. Here are the key changes.
The approximately 21 million retirees who collect a pension in Germany can look forward to significantly higher benefits in the coming year. As of July 1, 2020, pensions will increase by 3,15 percent in West Germany and 3,92 percent in East Germany.
Higher social assistance and unemployment benefits
Single adults who receive social assistance or unemployment benefit II will receive more money from January 1, 2020. The standard rate will increase by 8 euros to 432 euros per month. For older children and adolescents, the benefits will also increase by 6 euros to 308 euros and 328 euros per month, respectively. For children under the age of five, the rate increases by 5 euros.
Changes to child benefits & allowances
From January 1, 2020, the subsistence minimum will be adjusted upwards, meaning that the child maintenance advance (Unterhaltsvorschuss) also increases. Depending on the age of the child, the new benefit will be 165 euros, 220 euros or 293 euros.
Changes are also being made to the supplementary child allowance (Kinderzuschlag), so that no upper-income limit will apply and only 45 percent of the parents’ income will count towards calculating the supplement (down from 50 percent).
In addition to child benefits, parents in Germany are also entitled to a tax-free allowance for children (Kinderfreibetrag) that helps them save money on their annual tax return. This allowance will be increased from January 1, 2020, to 5.172 euros per child (if parents are assessed together - otherwise 2.486 euros per parent). There is also an allowance for childcare, education or training needs of up to 2.640 euros.
Housing benefit goes up
If you claim housing benefit, you can expect your payments to go up in 2020, as the federal government provides more relief to financially-stretched households. The higher benefit is based on average incomes and the cost of rentals in Germany and is generally paid as a rent subsidy, but people who own their homes may also be entitled. A total of 660.000 households are expected to benefit from the increase.
Child maintenance goes up
The new so-called “Düsseldorf Table”, which serves as a guideline for maintenance payments in the event of a divorce or separation, will come into force in 2020. Child maintenance payments will go up for all income categories - the minimum rate will increase to 21 euros a month, meaning that children under the age of six get at least 369 euros, six - 11 year olds are entitled to 424 euros and children aged between 12 and 17 get 497 euros.
Changes to healthcare
There are few changes being made to the healthcare system in Germany this year, as well.
New phone line for patients
In the event of unexpected health problems or medical emergencies, from January 1, patients in Germany can pick up the phone. The 116 117 number, which was previously only used outside office hours, will start around-the-clock service. Patients can receive an initial assessment to see how urgently they need to be treated - and be guided to a local doctor.
Mandatory measles vaccination
From March 1, 2020, a mandatory measles vaccination will apply to daycares, schools, other community facilities and refugee accommodation. Children who are already in daycare or school have until July 31, 2021, to prove that they have been vaccinated against measles. Staff must also be vaccinated. In the event of violations, a fine of up to 2.500 euros is payable.
Changes to transport in Germany
These changes to transport in Germany have been receiving quite a bit of coverage in the news, so they probably won’t come as a surprise, but just in case you’re not up to speed.
Cheaper train tickets
After the federal cabinet agreed to lower the VAT rate on tickets for long-distance travel, Deutsche Bahn committed itself to passing the savings directly onto its customers. From January, the cheapest ICE ticket will cost 10 percent less. Prices should hopefully be reduced across the board in the not-too-distant future.
Flying to become more expensive
From April 2020 the new, higher air traffic tax will come into force, a new measure intended to protect the climate. Depending on the length of the route, the tax amounts to somewhere between three and 59 euros per flight. The amendment is expected to generate an additional 470 million euros for the state in the coming year.
New car insurance premiums
From 2020 there will be new regional classes for motor insurance for around nine million drivers. The regional class reflects the so-called “damage balance” of a region and determines how expensive it is to insure a vehicle registered there. 5,1 million drivers are classified in a cheaper regional class, and for 4,2 million drivers it will be more expensive.
Higher fines for traffic offences
A new catalogue of fines will provide for heavier penalties for traffic offenders: if you drive or park your car in a bike lane, or if you don’t move aside on the Autobahn to form a so-called “emergency lane” in the event of an accident, you could face a hefty fine.
The penalty for parking offences will go up from 30 to 100 euros and drivers who fail to form an emergency lane will be forced to pay 320 euros and have their driving licence revoked for one month. In Flensburg, both offences are enough to land you with points on your licence as well.
Changes affecting consumers
If you shop or buy anything in Germany, you need to know about these changes.
Receipts for everybody
The Kassengesetz 2020 also makes its entrance in January, obliging all retailers in Germany to issue tax verifiable receipts to customers. The law, which is intended to make tax evasion much more difficult, has been criticised as unnecessarily bureaucratic and harmful for the environment.
No more plastic bags
In an effort to reduce plastic waste, the federal government has introduced a ban on plastic shopping bags. Exempt from the ban are the thin plastic bags used for fruit and vegetables. Bags won’t go out of the window immediately, however - a transition period of six months is planned.
Higher EEG surcharge
The surcharge that green electricity producers receive for feeding into the grid will increase from 6,405 cents per kilowatt-hour to 6,756 cents from 2020. This levy, which makes up around 22 percent of the cost of electricity in Germany, has been falling for the past two years but is now back on the up. Some electricity providers have already announced that they will increase their prices.
Sending packages more expensive
Deutsche Post’s parcel arm, DHL, announced back in December that the cost of sending parcels in Germany would increase from January 2020. The price of the M package will go up by 30 cents, and the 2kg, 10kg and 31,5kg packages will all go up by a euro each. Insurance for your posted items is also set to get more expensive.
Tampon tax goes down
The 19 percent VAT rate on feminine hygiene products like tampons and sanitary towels will be reduced from 2020. The lower tax rate of 7 percent will also apply to electronic newspapers, magazines and books.
Ready for change?
Most of these laws come into effect on January 1, 2020, so don’t be caught out! We think we’ve covered everything, but if we missed out any major changes taking place this year, let us know in the comments below!