Comprehensive Guide to Tax Returns in Germany: Deadlines, Filing, Deductions, and Expats’ Tips
Filing a tax return in Germany can be rewarding, especially for newcomers who may qualify for refunds on income taxes.
This guide covers the essential steps, deadlines, deductions, expat-specific tips, and practical advice on what to do if you disagree with your tax assessment.
Whether you’re an employee, freelancer, or expat, understanding the process can make tax season less stressful and more beneficial.
Why File a Tax Return in Germany?
For many employees, filing a tax return isn’t required, but it can lead to substantial refunds. Common reasons for filing include:
- Claiming Refunds: Many employees overpay throughout the year, and filing lets them recover excess payments.
- Work Expense Deductions: Claiming job-related expenses, especially for newcomers who incur moving costs.
- Freelance Income Reporting: Freelancers and self-employed individuals must report income and are legally obligated to file.
- Dual Income Sources: Those with multiple sources or foreign income must declare all earnings.
By knowing these reasons, taxpayers can identify their eligibility for refunds and requirements for filing, which can significantly impact their finances.
Important German Tax Return Deadlines
Understanding Germany’s tax deadlines ensures you stay on track and avoid penalties.
- Self-Filers: The tax return is due July 31 of the following tax year.
- With a Tax Advisor: Working with an advisor extends the deadline to February 28 of the second year after the tax year, allowing additional time.
- Late Filing Penalties: Missing the deadline can result in penalties, which are calculated based on a percentage of owed taxes.
Filing early not only avoids penalties but also speeds up any refund you may be entitled to.
Steps to File Your Tax Return in Germany
Filing options include Germany’s online system, tax software, and tax advisors. Here’s how each works:
1. Filing with ELSTER
ELSTER, Germany’s official tax platform, is free for those comfortable with German. Registration takes time, so it’s wise to set up your account early.
- Register: Verification may take a few days, so plan ahead.
- Complete Tax Forms: Fill in income and deduction details. Having basic German proficiency helps, as ELSTER is not available in English.
- Upload Documents: You’ll need your wage tax certificate (Lohnsteuerbescheinigung), proof of expenses, and deduction receipts.
- Submit and Track: Submit the form electronically and track processing in your account.
2. Using Tax Software
Tax software like
Taxfix,
WISO Steuer, and
SteuerGo provides English support, making it easier for newcomers to navigate German tax filing.
- Guided Assistance: Software asks simple questions to help complete the return, even if you’re unfamiliar with German tax terms.
- Digital Submission: Many options are compatible with ELSTER, allowing for digital submission.
3. Consulting a Tax Advisor (Steuerberater)
For complex cases, such as freelancing or owning multiple properties, a tax advisor is invaluable.
- Expert Knowledge: Advisors know specific deductions and can handle complex income reports.
- Higher Costs: Advisors charge based on income and case complexity, but their expertise can increase refund potential.
Working with an advisor not only simplifies the process but also helps avoid potential filing errors.
Common Mistakes to Avoid When Filing Tax Returns in Germany
- Missing Deadlines: Penalties accumulate, so plan to submit on time or consult an advisor for an extension.
- Providing Incorrect Information: Errors in your tax ID, address, or income details delay processing. Double-check all fields before submitting.
- Overlooking Additional Income: All global income, including investments or rental income from other countries, must be declared. This is especially relevant for expats with foreign investments.
- Ignoring Potential Deductions: Eligible deductions can save money but require supporting documents. Deductions include:
- Commuting costs
- Home office expenses
- Health and insurance costs
Each deduction you claim requires valid receipts or statements, so stay organized to maximize your refund.
- Relying Only on Pre-Filled Information: ELSTER imports certain employer-provided data, but it’s essential to verify that all pre-filled information is correct and comprehensive.
Key Deductions to Maximize Your Tax Refund
Taking advantage of deductions helps reduce your tax burden:
- Work-Related Expenses (Werbungskosten): Common deductions include commuting costs, work equipment, and professional training expenses. A flat €1,000 deduction applies to all employees, simplifying the process.
- Home Office Deduction: Those working remotely may claim a daily deduction of €6, up to a maximum of €1,260 per year.
- Health and Long-Term Care Insurance: Contributions are partially deductible, so keep annual statements from your insurance provider.
- Child Benefits: Families benefit from deductions on childcare and educational costs, which help reduce taxable income.
- Charitable Donations: Donations to German-registered charities are deductible and can be claimed with appropriate receipts.
These deductions make tax returns a valuable tool for reducing overall tax payments, especially for newcomers with unique expenses.
Filing for Expats: Special Deductions and Considerations
Expats in Germany often encounter unique expenses, and understanding specific deductions can make filing worthwhile:
- Moving Costs: Those who relocated to Germany for work may deduct moving expenses, such as transportation and housing setup costs.
- Language Courses: Language learning is often necessary for integration, and certain work-related language courses can be deductible.
- Double Housekeeping: For those maintaining two households, double housekeeping costs may be deductible, provided one is for work purposes.
These deductions
help newcomers save on costs associated with relocating to Germany.
Appealing Your Tax Decision (Einspruch)
If you disagree with your tax assessment (
Steuerbescheid), you can file an appeal within one month.
- Review Carefully: Read the Steuerbescheid to ensure all income and deductions were calculated accurately.
- File an Einspruch: If you find discrepancies, submit an Einspruch either through ELSTER or by mail, detailing your reasons.
- Provide Documentation: Attach any missing documentation or evidence supporting your claim.
The tax office may adjust your assessment after reviewing your Einspruch, potentially leading to a higher refund.
Setting Up a German Bank Account for Refunds
A
German bank account is essential for receiving tax refunds, as transfers to foreign accounts are not permitted by the German tax authorities.
- Choosing an Account: Many banks in Germany offer expat-friendly services in English, including N26, Deutsche Bank, and Commerzbank.
- Direct Deposit: Ensure you provide your IBAN when filing so the tax office can transfer your refund directly.
Having a local bank account simplifies financial transactions and ensures timely access to refunds.
Additional Filing Options for Expats
For those with income from multiple countries or unique tax situations, expat-specific tax services provide valuable support.
- Expat Tax Services: Specialized services handle complex returns involving foreign income and deductions relevant to international citizens.
- International Tax Advisors: Advisors familiar with German and international tax laws can help prevent double taxation and navigate tax treaties.
These services can streamline tax filing for expats, especially for those new to the German tax system.
Practical Tips for Newcomers Filing in Germany
Here are a few tips to make your filing experience smoother:
- Organize Receipts: Keep records throughout the year for potential deductions, especially work-related expenses and health costs.
- Double-Check Data: Errors in tax ID numbers or addresses can cause delays, so review all information carefully.
- Seek Advice if Needed: Consulting a tax advisor or using software with guided assistance can make the process much easier, especially for complex returns.
- Start Early: Don’t wait until the deadline. Registering for ELSTER and gathering documents takes time, so beginning early prevents last-minute stress.
With these practical tips, filing a tax return becomes manageable and can help maximize your refund.
What Tax Returns Mean for Newcomers in Germany
For newcomers, filing a tax return in Germany is more than just a financial task—it’s an opportunity to benefit from Germany’s robust tax system. Filing allows you to:
- Claim eligible expenses, helping offset living costs
- Stay compliant with German tax regulations
- Establish a routine that ensures future returns are easier
By understanding the process and leveraging available deductions, newcomers can make the most of the German tax return system, turning it into a beneficial experience rather than a daunting task.
FAQ: Tax Returns in Germany for Foreigners
How much tax return do you get in Germany?
The amount of tax return you receive in Germany varies based on individual circumstances, such as income level, deductions, and personal expenses. On average, taxpayers can expect a refund ranging from a few hundred to several thousand euros, depending on their financial situation and applicable deductions.
Is it mandatory to file a tax return in Germany?
Filing a tax return in Germany is mandatory for certain individuals, such as freelancers, those with multiple income sources, or individuals who received social benefits. For others, it is optional but may be beneficial if you can claim deductions or expect a refund.
What can be claimed in a tax return in Germany?
In Germany, you can claim various expenses in your tax return, including:
- Work-related expenses (e.g., travel costs, work equipment)
- Health insurance premiums
- Contributions to retirement plans
- Education and training costs
- Childcare expenses
- Donations to charitable organizations
How to get maximum tax refund in Germany?
To maximize your tax refund in Germany:
- Keep accurate records of all deductible expenses.
- Claim all eligible deductions, including work-related costs.
- Consider tax advice from professionals to identify potential savings.
- Ensure you are utilizing tax allowances, such as for children or dependents.
How do I get my tax return from Germany?
To receive your tax return in Germany, you must file your tax return (Einkommensteuererklärung) with the local tax office (Finanzamt). Once processed, the tax office will send you a tax assessment notice (Einkommensteuerbescheid) detailing your tax return and any refund due.
When to expect a tax refund in Germany?
After filing your tax return, you can typically expect to receive your tax refund within a few weeks to several months. The exact timeframe depends on the complexity of your return and the workload of your local tax office.
How to reduce taxes in Germany?
To reduce your taxes in Germany, consider the following strategies:
- Take advantage of tax-deductible expenses and allowances.
- Contribute to retirement savings plans (Riester or Rürup pensions) for tax benefits.
- Utilize tax-saving options for children and dependents.
- Explore opportunities for investment income that may have lower tax rates.
How to apply for a tax return after leaving Germany?
If you leave Germany and wish to apply for a tax return, you can do so by submitting your tax return (Einkommensteuererklärung) to your local tax office (Finanzamt) in Germany. Include your new address and any relevant documentation, and indicate your departure.
What happens if you don’t file taxes for 2 years in Germany?
If you do not file your taxes for two years in Germany, you may face fines and penalties. The tax office (Finanzamt) may also initiate legal action to recover unpaid taxes, and you could be subject to tax assessments based on available information.
What happens if I don’t pay German income tax?
If you do not pay German income tax, you may face penalties, interest on the unpaid amount, and potential legal action from the tax office. It is advisable to communicate with the tax office if you are experiencing financial difficulties to explore possible solutions.
