July 2019: 5 changes affecting expats in Germany
From pensions and child benefits to postage and Midijobbers’ pay, there’s plenty of things going up in Germany this July. Here’s an overview of five important changes expats should know about.
1. Deutsche Post increases prices
The price of almost all types of domestic shipments will go up by 10 cents (e.g. a standard letter will now cost you 80 cents instead of the previous 70 cents). The cost of sending a postcard will increase 15 cents to 60 cents. The price increases are currently being challenged, but for the moment they remain valid until the end of 2021.
2. More pennies in your pension packet
You may be spending more on letters, but if you’re retired, then you can thank your lucky stars that pensions will also be going up. Germany’s approximately 21 million pensioners will see their monthly benefits go up: by 3,18 percent in the western federal states and 3,91 percent in the eastern (new) federal states. As with everything, however, there’s a catch: the increase will push an estimated 48.000 pensioners over the tax-free allowance, meaning that their benefits will be subject to taxation for the first time.
The pension increase does not happen to everybody at the same time, however. If you retired in March 2004 or earlier, the increase will take effect on July 1. If you retired after this date, you will have to wait until the end of July to get the higher pension rate. This will take place automatically.
3. Child benefits go up
More increases - child benefit is going up as well. As of July 1, parents in Germany will receive an extra 10 euros per month for each child, meaning a monthly payment of 204 euros per child for the first and second child, 210 euros for the third child and 235 euros for each subsequent child. If you receive the benefit, your payments will be automatically adjusted; you do not need to do anything.
If you receive unemployment benefit, however, you are not likely to see any increase: this is because the government classifies the increased benefit as a part of your income, and adjusts your unemployment benefit payments accordingly.
4. New deadline for annual tax returns
Up until now, the deadline for submitting your annual tax return has been May 31. As of July 1, however, you have two months more to get the ghastly job done. If you consult with a tax advisor, the deadline is automatically extended to the end of February (up until now, it was December 31).
Beware, however: with the longer deadline comes a stricter attitude towards tardiness. The tax office can impose penalty surcharges on those who fail to submit on time - around 25 euros per month.
5. “Midi-jobbers” allowed to earn more
If you earn more than 450 but less than 850 euros per month, then you are considered in Germany as a “Midijobber”. This entitles you to pay lower social security contributions. From July 1, the upper earnings limit will be increased significantly, to 1.300 euros. According to the Federal Employment Office, this change will affect around 3,5 million people working in Germany.
On a midijob salary, you will continue to pay reduced social security contributions, but from July 1 you will also receive a full pension entitlement, for the first time. This means that you will no longer have to make additional contributions to receive full pension benefits after retirement.