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According to the plan proposed by Finance Minister Christian Lindner, foreign workers arriving in Germany could receive a tax refund of 30% during their first year of employment. In the second year, the discount would be 20%, and in the third year, it would drop to 10%.
However, the new rules would only benefit workers within a particular income bracket, and this bracket is yet to be determined. If the policy were approved, the applied income brackets and tax refund amounts would be re-assessed in five years.
As one of the new measures included in the government's budget for 2025, Lindner's proposal has not yet been approved. The ministers are expected to approve the full budget plan on July 17-th.
Lindner's proposal could be one of several measures Germany takes to encourage more foreign citizens to move to the country to work or stay there after finishing their studies. Along with the Chancenkarte program and the easing of work visa rules for non-EU students.
Germany is looking to neighboring countries such as the Netherlands and Austria for strategies to attract workers.
For example, in the Netherlands, authorities refund taxes of 30% to highly skilled migrants working in certain fields for the first 20 months of their employment. In the next 20 months the discount is reduced to 20%, and after another 20 months - to 10%.
“It’s worth a try, and in the end, it’s also good for German companies," Economy Minister Robert Habeck (Greens) said.
While coalition leaders Scholz, Lindner and Habeck agree that the rebate should be trialled, criticism has come from the opposition. The CDU, The Left and AfD are all opposed to the policy, with CDU representative Julia Klöckner arguing that the rebate amounted to “discrimination against [German] nationals”.
There have been criticisms from other quarters as well, with the head of the German Trade Union Confederation (DGB) saying the government should focus on improving childcare and health services to attract foreign workers.
Source: I am Expat
