Excerpted from the Germany Career Guide
Cost of Living
The good news: consumer prices in Germany are holding steady, up by a manageable 2.0 percent from a year ago. This rate matches the European Central Bank’s (ECB) target rate of 2.0 percent and is virtually unchanged in the past six months. Germany is Europe’s largest economy, with a thriving workforce and rising consumer demand.
Even better news: Germany’s rising wages are topping inflation, giving consumers a real purchasing power increase. Germany’s Federal Statistics Office reports German wages had their biggest increase in nearly four years, up by 3.2 percent year-on-year.
Not-so-good news: Unfortunately, Germany’s economic health is tied to the economic weakness of the European countries struggling with an escalating debt crisis.
With more than 644,000 km of paved roads, road travel is very popular in Germany. Germany’s system of high-speed motorways, known as the Autobahn, is world famous.
Public Transport: All major cities in Germany feature impressive public transport systems. Tube, tram and buses assure reliable transportation. Berlin, Hamburg, Frankfurt, Munich and Nuremburg each have subways known as U-Bahn. During the night, there often exists a network of night buses, providing a cheaper alternative to taking a taxi. Many of Germany's cities encourage cyclists with designated bicycle lanes.
The German housing market is hot, so much so that many economists fear a real estate bubble may be brewing.
The reasons for the sharp increases in the prices for residential housing in Germany are complex, including the relative stability of the German economy versus other troubled Euro Zone countries, low interest rates on mortgages, a shortage of attractive properties in Germany’s major metro areas and the historically low home ownership rate in Germany.
Individuals pay several types of taxes in Germany. Income tax, solidarity contributions, church tax (where applicable), employee contributions to social insurance (health insurance, pension insurance and long-term care insurance) and unemployment insurance are deducted from the agreed gross wage and transferred by an employer directly to the institutions responsible. Income earned from employment is subject to a wage tax, or Lohnsteuer, and is withheld from an employee’s pay by the employer. Income earned through other sources is subject to income tax, or Einkommensteuer. In addition to these taxes, Germany also has an ad valorem or Value Added Tax (VAT) for goods and services, which is officially called the Umsatzsteuer (USt), but it was originally called Mehrwertsteuer (MwSt.) and is often still referred to by this name., There are also taxes on motor vehicles and real estate. Those who wish to be affiliated with one of Germany’s official churches also pay a church tax or Kirchensteuer.
This is just a short sample of what you’ll find in over 100 pages of information in the complete Germany Guide.