I have heard that Germany is a very highly taxed country, is this true?

This is still true. With a top marginal individual tax rate of 48 per cent plus a surcharge of 5.5 per cent based on that tax - you might say Germany is still a highly taxed country.

People in employment additionally have to bear their 50 percent portion of the social security contributions.

Please note that bringing down the individual's income tax burden is one of the key characteristics of the current German tax reform.

What are the most important things to do about tax before coming to Germany?

You check whether you need a residence permit and a work permit and make sure that you have an employment agreement / assignment contract including all terms and conditions of your assignment.

If the company policy does not provide for tax equalisation you should negotiate a tax clause which will protect you from any potential disadvantages, if German tax rules result in a higher tax burden than you would have under your local tax regime in your home country.

If this is not possible, you should ask the assigning company for a detailed breakdown of the compensation package and the tax burden on the various elements in order to fully understand your gross-net position in Germany.

When I arrive, what must I do first?

You have to register with the local registration office ("Einwohnermeldeamt").

Upon registration as a member of specific churches you become subject of church tax of 9 percent of the income tax.

A further registration with the tax office is not required.

If, as a rule, German social security applies, the employer takes care of registrations.

The local office issues a wage tax card ("Lohnsteuerkarte") which you give to your employer's payroll department as a basis for the tax withholding.

If you are married and joined by your spouse in Germany make sure that you receive tax class 3 on the wage tax card.

I am trying to decide whether to buy a house or just rent - my decision depends on the real estate market - but are there taxation issues to also consider?

Yes, buying a house triggers real estate transfer tax of currently 3.5 percent of a purchase price which is not tax deductible.

Also, if you use an agent who may charge you between two and seven percent of the purchase price, depending on the area, these fees are not deductible in case of a house purchase but are deductible upon arrival in Germany as part of moving expenses.

If your stay in Germany is temporary and you maintain your main residence in your home country, you may claim the rental costs as tax-deductible costs of double housing.

If you are a tax resident in another country, which has a tax treaty with Germany, buying a house may have an impact on determining your main tax residence and therefore the taxation of your worldwide income including capital income.

My work will require some expenditures from buying a car to taking clients out to lunch - is the German taxation system generous in allowing deductions for such expenditure?

German tax rules allow the deduction of expenses effectively related to the employment in Germany, if they are not reimbursed by the employer and if documented properly.

In some cases, the law provides how to calculate the deductible costs, e.g. commuting between home and office by car and in some cases extensive formal requirements are established in order to avoid abuses, e.g. costs for entertainment, lunch with clients, etc.

In negotiating a salary package I have to decide how much to take in salary and how much in allowances and the provision of things such as a car - are there general rules which can guide me on that decision?

There are no general rules.

It depends more on the personal circumstances of the individual whether certain compensation elements can be delivered in a tax effective way or will increase the tax burden of the expatriate. For example, the tax burden in Germany is substantially lower if a non-working spouse is accompanying the expatriate to Germany.

In such a case they can be taxed jointly.

In general, it is recommended to receive input from a tax consultant in the negotiation process.

In your experience are there areas of the German tax system which provide particular problems for expatriates?

If problems mean high tax costs, yes.

Compensation packages for expatriates often include allowances or reimbursement of assignment related costs, like school fees, housing, costs of living differentials, etc.

Although additional costs are caused by the assignment and, therefore, to a great extent employment related, there is no tax privilege for expatriates as in some other countries.

Although there is abroad discussion in Germany about the need for foreign experts this has not resulted in the establishment of tax incentives.

You may be aware that Belgium and the Netherlands have these privileges and Denmark has also recently introduced some tax incentives for expatriates.

Please note that the complexity of the calculation of compensation for expatriates and their tax treatment also requires a lot of attention from the employer, i.e. the receiving German companies, in order to facilitate the deductibility of costs for corporate tax purposes and to avoid any exposure on the level of the wage tax withholding liability.

All tax systems are complex - is the German system more complex or simpler than others?

After several years of experience in our international network giving advice to companies and their expatriates all over the world, I would not say that the German tax system is more complex than others. As in other countries you have rules, exemptions to the rules and exemptions to the exemptions, etc.

What is even more important and sometimes frustrating is the increased frequency of modifications.

Thomas Kausch is a tax adviser with PricewaterhouseCoopers Germany. He will be making regular contributions to a personal finance section, providing valuable advice on finance issues for expatriates.