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How will the 2024 budget affect foreigners in Germany?

Foreigners living in Germany will see some social services increasing in 2024 - but also grapple with budget cuts in core areas of their everyday lives. We lay out what to expect.

Published: 21 September 2023 17:14 CEST
A piggy bank
A German piggy bank with euro notes. Photo: picture alliance/dpa/dpa-Zentralbild | Patrick Pleul

Over the summer, Germany approved its much debated budget for 2024, which is to be officially adopted in November.

Some expenditures are increasing, namely those for defence. The German government has already set aside €51.8 billion in military spending for 2024, up from €50 billion this year. This puts it at the NATO-set target of two percent of each member state’s GDP.

The Bundesrepublik has for years been criticised that it did not meet this quota, but for the first time is set to – and even exceed it – as it increasingly strives to revamp its flailing Bundeswehr and lend more support to Ukraine.

But to budget for this increase – among others – without going into debt, it’s also cutting certain services which affect foreigners in Germany. Here’s what you need to know.

READ ALSO: German government approves belt tightening budget for 2024

Elterngeld is being halved

Many move to Germany for higher paying jobs which the country offers, particularly in STEM fields. But couples and individuals who have a taxable income of more than €150,000 per year will no longer qualify for Elterngeld (parental allowance) when they go on parental leave.

Previously the benefit was available to couples earning less than €300,000, or €250,000 for single parents. The move is expected to affect around 60,000 families in Germany.

READ ALSO: ‘A horrible idea’: How cuts to Elterngeld will affect families in Germany 

Less funding for trains

For years the German government has vowed to refurbish its rail services, which are notorious for their frequent delays and cancellations. It had even set aside €45 billion for Deutsche Bahn in a far-reaching climate package passed in March. Yet the government has now said it will currently only fund the rail service “as far as financially feasible”.

For environmentalists, this was a double whammy as the budget still includes tax breaks for motorists – something which the Green Party has pushed Finance Minister Christian Lindner (FDP) to scratch out. 

But train enthusiasts looking to explore Germany and beyond can still look forward to speedy services coming out in the coming months, often in partnership with Austrian and French rail lines. And despite talk of raising the price, the Deutschlandticket is still set to be available for just €49 a month (at least for the moment).

The Inter City Express, ICE 4, of Deutsche Bahn, arrives at Interlaken Ost station in Bern.

The Inter City Express, ICE 4, of Deutsche Bahn, arrives at Interlaken Ost station in Bern. Photo: picture alliance/dpa/KEYSTONE | Peter Schneider

Reducing funds for digital services

Germany has become woefully well-known for its lack of digital services available, include many which would make the lives of foreigners much easier such as an online Anmeldung or renewing a visa digitally with the immigration offices.

This has steadily been improving, especially since Germany passed an Online Access Act (OZG), to significantly increase such services. But for this year the Interior Ministry has earmarked €3.3 million for the digitalisation of administration and administrative services next year – compared to €377 million this year.

It’s true that many German politicians – including Chancellor Olaf Scholz (SPD) – are pressing for digitalisation in part to persuade more foreigners to come to, and feel comfortable in, Germany. But with the lack of funding, a digital revolution may take a bit longer than hoped. 

READ ALSO: Is Germany a failed state for digital public services?

Higher health care contributions

The one billion budget for long-term health insurance (Pflegeversicherung) is being axed, but the gap is being made up for by higher health care contribution rates which were adapted in July of this year. However some people, such as those with children, have seen their contribution rates decrease slightly. 

READ ALSO: German health insurance contributions ‘to increase in 2024’

More social benefits

The budget may seem to spell doom and gloom for many, but it’s also giving some social services a major boost. Germany’s new unemployment benefit, Bürgergeld, will go up by €23.8 billion in 2023 to €24.3 billion next year.

An additional €127 billion is being allocated to pension insurance (Rentenversicherung), which Germany sees as sorely needed as its population ages and the cost of living – with an inflation rate that sits over six percent – rises.

Foreigners who are accessing some social benefits or their pension could benefit from these changes. 

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BANKING

Reader question: Is it safe to give out your IBAN in Germany?

Even in privacy-obsessed Germany, you'll often be asked to provide your bank details - or IBAN - when purchasing products or setting up contracts. Is it always safe to do so - or is there a chance of fraud?

Published: 20 September 2024 12:28 CEST
Reader question: Is it safe to give out your IBAN in Germany?

When it comes to personal data concerns, there’s arguably no nationality who is more keen to keep their private lives private than the Germans. 

This was summed up recently at one cashless business in Berlin, where the owner revealed that people were concerned that paying by card would let the company see into their bank account. 

But in spite of the general suspicion towards digital technologies, there are plenty of situations in Germany where you’re likely to be asked for your International Bank Account Number – or IBAN for short – and are expected to give it willingly.

You may be setting up a new contract for your electricity supply, a new mobile phone or for a rental flat. Or you could be buying something online via a direct debit or hunting for bargains on an online marketplace – in all these cases, giving your IBAN to the seller or company is a must. 

READ ALSO: Why German banks are getting more customer complaints than ever

Though simply jotting down your details is treated as par for the course, are there situations where consumers should be a bit more cautious? 

Here’s an overview of what you should know about the risks of giving out your IBAN and how consumers can best protect themselves against fraud. 

Is giving out my IBAN safe?

According to Matthias Lange, payment methods expert at the German Association of Banks (BVDB), the answer is generally yes – and often there are no ways around it.

“For example, if I want to pay my rent or have my money transferred to my account for a sale via classified ads, I have to give the account details to my landlord or the buyer,” Lange explained on the ING website. “And if I buy something by direct debit, they will also ask for my account number.”

Lange also points out that it’s perfectly normal for companies to include their IBANs on letters and bills they send out, which shows just how relaxed their are about customers having this information. 

What could a fraudster do with my IBAN?

Very little, is the answer – though there are options. 

The most important thing to know, however, is that nobody will be able to access your bank account using the IBAN alone.

In online banking in the EU, two-factor authentication is a minimum. Normally, that means you’ll need a password to access your account, as well an authentication app or a code that’s sent to your mobile phone.

All of this makes it much harder for criminals to access your financial data and make fraudulent transactions.

READ ALSO: How to grow your savings in Germany during high inflation

However, there is one way that fraudsters could try to use your IBAN to steal money from your account: setting up a Lastschriftmandat, or a mandate for a direct debit. This can usually be done by setting up a simple form and sending it off to the bank or company in question.

Even in this situation, however, the problem can be easily resolved. 

Woman paying by card online

A woman checks her card details while completing a purchase online. Photo: picture alliance/dpa/ZHPH Production / Stocksy United | N26 GmbH

“If a fraudster has actually completed a direct debit with your account details, it is possible that the amount will initially be debited from your account, but you will be able to get the money back quickly and easily,” said Lange.

This strategy is also a risky one for any criminal, since the bank will have plenty of information on hand about the person that the money should be transferred to.  

Another old-fashioned option is for someone to intiate a paper translation by forging your signature on a paper transfer form – though this would probably arouse suspicion as this type of transfer is so rarely used today.

Lange also points out that this would involve the criminal supplying their bank details, and that a swift response to the issue would enable any victims to get their money back right away. 

How can I best protect myself from fraud? 

Though giving out your IBAN is generally safe, you should still remain cautious about giving out more details than are necessary – particularly when it comes to things like passports or information that’s included on personal IDs. 

A major red flag for phishing attempts – that is, attempts to steal your data – is if you are approached out of the blue and asked for specific data.

That could be through an unexpected phone call, a link to a website or an email that looks like it comes from an official source, like a credit card company or a bank. In these cases, a good rule of thumb is that no bank will contact you and ask for a tonne of personal details, and especially not passwords or pin numbers. 

In other circumstances, such as applying for a flat, if are asked for extra information – like your passport and bank account statements – make sure that the housing company is reputable before handing all the information over. 

If in doubt, simply get in touch with your bank and ask them for their advice. It’s in their interests to avoid fraudulent transactions on your account, so they will be more than happy to help.

Another important thing to do is to check your bank account regularly for unexpected transactions. You can generally recover any money that’s taken from you fairly easily, but the quicker you respond, the better.

According to Lange, there are key deadlines to know about if you want to challenge or withdraw a direct debit transaction.

READ ALSO: Why it’s almost impossible to find a free bank account in Germany

In normal cases, you have eight weeks to do this – but if the transaction is made via an unauthorised madate, this can be extended by more than a year. 

Though there are no official figures on the level of IBAN fraud carried out in Germany, Lange believes it’s nothing in comparison to the some 11 billion direct debits that are completed in the country each year.

A more common practice is for criminals to buy goods via invoice and get the invoice sent to an unwilling addressee. 

“But that’s more of a problem for the retailer and has nothing to do with fraudulent IBANs,” Lange explained. “And of course, you don’t have to pay the invoice.”

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