Why should I submit a tax return in Germany?
Nine out of ten taxpayers in Germany receive a refund when they submit their annual tax return (according to data from the Federal German Statistics Office). Anyone who has earnings in Germany can claim back part of the income tax which they have paid throughout the year. With our help, this process should only take a couple of hours or so to complete. In the following years, this is even easier and quicker due to the automatic transfer of many entries.
How much can I expect to get back?
If you are employed, you will pay regular tax and social insurance contributions. The amount of tax you pay will depend on the amount you earn, your marital status and your tax bracket. Employment tax is withheld by your employer and transferred directly to the tax authorities.
However, any circumstances which qualify you for a lower rate of tax are not taken into account at this stage. For example, the €1,200 allowance for income-related expenses (Werbungskostenpauschale) can only be claimed when you submit your tax return. This means that most people receive an average refund of about €1,000, our customers can expect even €1,500 due to various individual tips on saving taxes.
To prevent you from paying tax in both Germany and your home country, Germany has double taxation agreements with most countries. To find information about your country, visit the Federal Ministry of Finance website. You can also submit a German tax return from your home country if you have already left Germany. Just be sure to specify the details of a German current account for your refund.
Who must submit a tax return in Germany?
While employees are generally advised to submit a tax return because of the expected refund, there are some circumstances in which you are obliged to do so. This is the case if in 2022 your income was more than €10,347 for a single person (€20,694 for a married couple or registered partnership) and if
- You are married and one spouse has opted for tax class (Steuerklasse) III or V as stated on your employment tax statement (Lohnsteuerbescheinigung).
- The tax office (Finanzamt) has granted you an allowance (Freibetrag) on the employment tax statement.
- You have other income or income replacement benefits (Lohnersatzleistungen) exceeding €520 e.g. maternity benefit (Mutterschaftsgeld), parental benefits (Elterngeld) or paid sick leave.
- You have received extraordinary income, such as severance payments for which your employer retained employment tax.
- You have divorced and at least one spouse has remarried in the same year.
- You have more than one employer at the same time (excluding mini-jobs).
- You have received income in another country during the financial year, e.g. in the year of relocation to/from Germany.
Freelancers and self-employed persons are also required to submit a tax return, as well as pensioners who receive a pension of more than €1,500 per month and have not previously submitted a tax return. If the tax office (Finanzamt) sends you a reminder letter stating a deadline for submission of your tax return, then you are required to do so, even if none of the above applies to you.
How can I do my tax return?
Although you can download all the necessary tax return forms and print them out, you can also use the official software known as ELSTER (ELektronische STeuerERklärung). This tool allows you to submit your German tax return via the internet, saving both you and your tax office time. You need to sign up for an account and will then be sent a password by post. This is a free tool, but the software is only available in (bureaucratic) German, and it is very complex. Since it was developed by the Ministry of Finance, it does not give you any hints on how to save taxes or maximise your refund by showing you fields which you might have missed.
Tax return software and online applications
If you find the ELSTER tool too complicated, there are a range of desktop and online tools available to help you complete your tax return in Germany correctly. They also provide tips and support for maximising your refund.
Personal help
You can also ask a tax accountant (Steuerberater) or an “income tax assistance union“ (Lohnsteuerhilfeverein) to complete your tax return. Although you have to pay a substantial fee for the services of these tax experts, it can be worthwhile if your income is high and your situation is complex due to property holdings or different sources of income. Freelancers and self-employed persons with high incomes often use these services.
If you decide to do your tax return yourself, you can also contact your local tax office (Finanzamt). While they try to answer any questions you might have, they do not help with actually filling in your tax return.
There are several foreign services that offer tax advice and help you to complete your tax return in Germany. You should be aware that they operate unofficially, as they are not legally permitted to do so by German law. They are therefore unable to officially assist you with questions from/to the tax office or represent you if the tax office makes a mistake, which can happen due to the complexity of the laws and time pressures.
Deadlines
The German tax year is from January to December. You can submit your tax return for any past year from as early as 01.01 of the following year. If you are employed, you will usually receive the employment tax statement (Lohnsteuerbescheinigung) from your employer by February.
Unless you are required to submit a tax return (as outlined above), you have four years to send it in. For example, in 2022 you can submit your returns for 2021, 2020, 2019 and 2018 all at once and can expect to receive a few thousand Euro as a refund in one go.
If you are required to submit an income tax return (Einkommensteuererklärung), you must do so by 31.07 of the year following the one in which the income was received. While there may be penalties and interest payable if the return is submitted late, the tax office will generally send a reminder and issue a warning first. If you are running out of time, you can always contact your local tax office (Finanzamt) before 31.07 and ask them to extend your deadline by two or three months without further explanations. These extensions are then granted automatically without any formal response by the tax office. After submitting your tax return, it takes eight to twelve weeks for the tax office to process it and pay the refund into your bank account. Once processed, you will also receive your tax assessment notice (Steuerbescheid), stating the amount of your refund and comments from the tax office.
Legal ways to maximise your tax refund
As in many other countries, Germany allows you to deduct a variety of expenses from your taxable income, thereby lowering your tax burden and increasing your refund. Some of the expenses which you can specify in your tax return are listed below:
Income-related expenses (Werbungskosten) including:
- Expenses for moving house for professional reasons, (including relocation to/from or within Germany).
- The costs of applying for jobs, including those applied for from abroad.
- Expenses for traveling from your home to your place of work.
- Costs of vocational further training, such as work-related books, training courses, language courses etc.
- Expenses for work-related equipment, e.g. laptop, desktop etc.
- The costs of running two households within Germany or in Germany and abroad, e.g. if you have a primary household abroad where your family (wife and children) are living: flight and train tickets, telephone calls, rent paid in Germany.
Special expenses (Sonderausgaben), including:
- Retirement insurance expenses, i.e. insurance premiums and contributions to private pension schemes.
- Expenses for additional retirement savings.
- Charitable and political donations to German entities.
Exceptional costs (außergewöhnliche Belastungen), including:
- Personal expenses which most taxpayers inevitably incur; e.g. personal medical costs.
- Financial support to close dependents in need.
- Professional training.
The following is provided for each child under 18 (or under 27 if still attending school and without earnings)
- A tax-free child allowance and an allowance for the child’s care, educational or professional training requirements OR
- Child benefit.
The tax office checks which option is most favourable for each taxpayer: child benefit or the deduction of the above-mentioned allowance. In addition, a tax deduction can be made for childcare costs, up to 4.000 Euro per child and year. There are additional tax reductions for employment-related expenses or services in or related to your household. It is particularly advisable to submit a tax return if you have worked only a few months in Germany and worked in a lower income country for the rest of the year. Your salary will be treated as if it applied to a full year, which leads to a lower tax bracket and lower taxes.
The more conditions you fulfil, the higher your refund will be. We will guide you through all these sections with simple questions and detailed explanations of every step. It is important to keep receipts of most expenses, as proof that they were incurred between 01.01 and 31.12 of the year in question. However, if you take up employment in Germany, which makes you liable for income tax, and you incurred costs related to this during the previous year, you can declare them and have them deducted from your taxable income. To do so, you must submit a tax return for the previous year as well, even if you had no income in Germany that year. The tax reduction will be carried over to the year in which you earned income in Germany.
Documents needed for your tax return
- Your employment tax statement (Lohnsteuerbescheinigung), which summarises all your earnings and the taxes you paid during the year and which is issued by your employer either at the end of your employment or at the end of the tax year.
- Your tax identification number (TIN, Steuer-Identifikationsnummer or Steuer-ID), a unique 11-digit number that you receive by post, about six weeks after you register your residency with the local municipal office (Bürgeramt).
- Your tax number (Steuernummer), if you have one from your current local tax office. It can be found on your last tax assessment (Steuerbescheid).
- Your German bank account details for your refund (IBAN, BIC).
- Proof of any income received outside Germany for the year of the tax return. This is used to determine your tax rate. There is no double taxation.
- Documents relating to any deductions (see above)
- Income-related expenses (Werbungskosten).
- Special expenses (Sonderausgaben).
- Exceptional expenses (außergewöhnliche Belastungen).
- Child(ren), if applicable
- Name, date of birth of child(ren).
- Amount and period for which child benefits (Kindergeld) were received. If an application for child benefit was rejected, the rejection letter is required.
- Expenses for childcare or education, e.g. Kindergarten/Kita, afterschool care
Any other income or government benefit, e.g. parental benefits (Elterngeld), maternity benefit (Mutterschaftsgeld) etc.