Germany's CDU/SPD Coalition Reform Package: What Expats Need to Know

Introduction

Germany's newly formed CDU/SPD coalition — often called Schwarz-Rot — has agreed on a broad reform package that touches nearly every corner of daily life in Germany. From how much tax you pay on your salary, to how you report sick days at work, to new rules around job contracts: this package is one of the most far-reaching sets of domestic policy changes in recent years. For expats and immigrants living in Germany, understanding what is changing — and when — is essential. Whether you are employed full-time, freelancing, or running a business, at least some of these reforms will affect you.

Tax Relief: More Money in Your Pocket

One of the headline measures in the coalition agreement is income tax relief, particularly targeted at low and middle-income earners. While the precise thresholds are still being finalized in legislation, the direction is clear: workers on average and below-average salaries should see a modest but meaningful increase in their net monthly income.

For expats, this is relevant for several reasons. First, if your salary is in the low-to-mid range — common for people in their first years in Germany, or those working in care, hospitality, or retail — you may notice a slightly higher net pay once the new rules take effect. Second, any change in your tax bracket or net income can indirectly affect benefit calculations, child allowances (Kindergeld), and contributions to your Rentenversicherung.

It is worth consulting a Steuerberater (tax adviser) or using a reputable tax app (such as WISO or Taxfix) once the exact figures are published to understand your personal situation.

Sick Leave Rules: What Is Changing

The reform package also includes adjustments to sick leave (Krankschreibung) procedures. Under the current system, a digital sick note (eAU) is sent directly from your doctor to your employer and health insurer. The coalition is now discussing changes to when and how sick notes must be submitted, with a potential focus on reducing short-term absenteeism while protecting genuinely ill workers.

For expats, the key practical takeaway is: always consult your doctor if you are unwell enough to miss work. Do not rely on self-certification for extended absences. Keep your Krankenversicherung card up to date and make sure your employer has your correct health insurance details on file. If rules change during the year, your employer's HR department or works council (Betriebsrat) will typically communicate the updated procedures.

Labor Market Changes: Fixed-Term Contracts and High Earners

Perhaps the most debated part of the reform package involves the labor market. The coalition wants to give companies more flexibility by allowing longer fixed-term (befristet) employment contracts and making it easier to dismiss employees who earn above a certain threshold. The stated goal is to encourage companies to hire more freely, particularly in a period of economic uncertainty.

For expats, this is a nuanced development. On one hand, more flexible hiring rules could mean more job openings, including for internationally mobile workers who are often offered fixed-term contracts initially. On the other hand, workers on fixed-term contracts should be aware that their negotiating position may not improve under these rules. Unions (Gewerkschaften) have expressed concern that greater flexibility for employers could erode job security for workers.

If you are currently on a fixed-term contract, it is advisable to check whether your employment status affects your residence permit. A valid Aufenthaltstitel tied to employment typically requires proof of ongoing work. A contract that is not renewed could have implications for your visa status. Always inform your Ausländerbehörde of significant changes in your employment situation.

Frequently Asked Questions

Does the tax relief apply to foreign nationals living in Germany?

Yes. Income tax rules in Germany apply based on residence and income source, not nationality. If you are tax-resident in Germany — which is generally the case if you live here more than 183 days per year — the new tax relief measures will apply to you in the same way they apply to German citizens.

Will the new sick leave rules affect my Krankenversicherung?

The sick leave procedural changes are administrative in nature and do not alter your fundamental entitlement to sick pay (Krankengeld) through your Krankenversicherung. Your rights as a patient and as an employee remain protected. However, it is always a good idea to stay informed through your health insurer's official communications.

If my fixed-term contract is extended under new rules, does my residence permit automatically follow?

No. Your residence permit and your employment contract are separate legal documents. An extended work contract does not automatically extend your Aufenthaltstitel. You must apply for a permit extension through your Ausländerbehörde in good time — ideally several months before your current permit expires.

Conclusion and Next Steps

The CDU/SPD coalition reform package represents a significant shift in German domestic policy. For expats, the most immediately relevant areas are tax relief (check your payslip once the law passes), sick leave procedures (stay updated via your employer and health insurer), and labor market flexibility (understand how contract changes may affect your visa status).

As with all coalition agreements, the details will be refined during the legislative process. Follow official sources such as the Federal Government website (bundesregierung.de) and BAMF for updates that specifically affect foreign nationals. If you have complex questions about your individual situation, consult a qualified immigration lawyer or a recognized advice centre.

Source: tagesschau