Nobody loves to file their tax declaration, whether you are German or an expat. However, the average tax return in Germany is 1.051 euros. After reading this guide, you will understand why you can benefit from submitting your tax declaration in Germany and how you can do so with little hassle.
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Is it mandatory to file a tax declaration in Germany?
No, it is not mandatory to file a tax declaration in Germany (Steuererklärung) if you are a regular employee without any side income unless one of the following applies:
- You receive other payments or substitute income benefits (Lohnersatzleistungen) that are more than 410 euros, such as parental allowance (Elterngeld)
- You have received extraordinary income, such as severance payments
- You got divorced, and either you or your ex-partner got remarried in the same year
- You have several employers at the same time (not counting mini-jobs)
- You have received income in another country, for example, the year of your relocation or rent payments from a property
- You are married, and you or your partner have opted for tax class III or V
- You have received an allowance (Freibetrag) from the local tax office
- You have been in Kurzarbeit
Should you receive a letter from the tax authorities (Finanzamt) asking or reminding you to submit your tax declaration, you must do so, even if the situations mentioned above do not apply to you.
For freelancers and self-employed, it is mandatory to submit a yearly tax declaration.
Related Guide: Freelancing In Germany As A Foreigner [How-To Guide]
Can you claim taxes back in Germany?
Yes, you can by submitting your tax declaration. Most people who hand in a tax declaration will receive a tax refund of hundreds or sometimes even thousands of euros.
As an employee, your income tax (Lohnsteuer) gets automatically deducted from your salary each month and sent to the German tax authorities. You can find details of the taxes and social security contributions you are paying on your payslip.
Related Guide: How To Read Your German Payslip?
As a freelancer or self-employed, you have to prepay your taxes every quarter (until the 10th of March, June, September, and December).
By declaring your taxes with your tax return, you have the chance to reduce the taxes you paid already and ask for a refund. You reduce your taxes by reducing your taxable income through expenses.
Every employee in Germany has the automatic right to declare expenses worth 1.000 euros, whether they actually happened or not. However, there is misleading information on other English-speaking websites, which tell you that you can claim those 1.000 euros via your tax return. That is incorrect.
To benefit from this 1.000 euros reduction of taxable income as an employee (Arbeitnehmer-Pauschbetrag), you don’t need to file a tax declaration, as it usually gets considered by your employer when subtracting your wage tax on your payslip.
However, many employees have more than 1.000 euros in work-related expenses per year, which you should declare to reduce your taxable income, and thus actually get money back.
That’s why even if you don’t have to file a tax declaration, it is worth investing a little bit of time, research, and effort into submitting your tax return.
How to get more taxes back from Germany?
There are three different expense categories, with which you can reduce your taxable income and thus increase your tax return from Germany.
1. Work-related expenses (Werbungskosten)
Here are a few examples of work-related expenses:
- Costs created through job applications
- Your daily commute to work
- Any new electronics you bought, which you also use for work
- An office room in your apartment
- Costs for moving/relocating because of a job
- Costs for having two households to reduce the commute to work during the week
- Travel expenses for business travel
- Vocational training
2. Special expenses (Sonderausgaben)
Here are a few examples of special expenses:
- Charity or political donations within Germany
- Expenses for private pension savings
- Social security contributions (such as unemployment, health care, etc.)
- Church tax
- Business-travel expenses
3. Exceptional expenses (außergewöhnliche Belastungen)
Here are a few examples of exceptional expenses:
- Medical costs, such as a wheelchair, glasses, etc.
- Alternative medicine, such as acupuncture, homeopathy, etc.
- Reconstruction of a household due to a disability
- Support of family in need, such as payments to your parents
Some of these expenses get taken into account automatically, others stand in relation to how much you earn.
To make your life easier, you should start collecting or archiving the receipts for any qualifying expenses throughout the year, so you don’t begin scrambling when it is time for your tax return.
How to file a tax declaration in Germany?
Now that you know the benefits of submitting your tax declaration let’s take a look at your different options to file a tax return in Germany.
1. Use a tax return online software
As a regular employee, using a tax return software and entering all your data online is by far the fastest and easiest way to submit your tax declaration. Thankfully, a few providers will guide you through the entire process in English for a small fee of around 30 euros. Additionally, these softwares provide you with tips on how to maximize your tax refund.
Best tax return software in Germany in English
Here are our top picks for the best tax return software in Germany in English. All five software providers calculate an average tax return of more than 1.000 euros. They also offer to enter your data first, so they function as a German tax refund calculator. If you are happy with the outcome, you can pay for the software and file the return with them.
Related article: Best Tax Return Software in Germany
2. Use a tax consultant
If you are self-employed, have multiple income sources, or are unsure how to handle taxes in Germany and your home country, you should consider consulting a tax consultant (Steuerberater). Being a tax consultant in Germany is a very honorable profession with up to 10 years of education.
A tax adviser prepares, processes, and submits your tax declaration. Therefore, you can expect the most individualized and accurate service that comes with a higher fee than the other options listed in this guide. The fees depend on how complex your case is and can range between 200 euros and 1.000 euros or more. However, your tax return will most likely also be higher than if you do it yourself or use a software.
3. Become a member of a Lohnsteuerhilfeverein
Suppose a tax consultant is too pricey for you, but you would like to have external help for your tax declaration. In that case, you can become a member of a Lohntsteuerhilfeverein, a German tax assistance association. Every town has such an association, which helps members to prepare their tax declaration. The drawback is that these associations only operate in German. Usually, you pay an annual membership fee based on your salary (on average, around 100-300 euros per year).
You can search for the nearest Lohnsteuerhilfeverein on its official website.
This option is only applicable to regular employees. If you are self-employed or earn a side income as a freelancer, you cannot become a member of a Lohnsteuerhilfeverein.
4. Use the official German tax authorities online form
ELSTER (Elektronische Steuererklärung) is the official online platform to submit your tax declaration. Using ELSTER is by far the most complicated, time-consuming, and error-prone way of filing your taxes. After creating an account, you will need to enter German bureaucratic forms.
If you want to suffer through this experience, I am happy to share the detailed translations of the German tax return form in English done by Toytown Germany. If you just got a heart attack by looking at the length of those forms and want to save yourself the hassle and maximize your tax refund, we suggest using one of the English online softwares or a tax adviser.
Documents needed for your tax return in Germany
Regardless of which of the four options you choose to submit your tax declaration in Germany, you will need to have the following documents handy:
- Your employment tax statement (Lohnsteuerbescheinigung), which is a summary of all your earnings and paid taxes of the year. You will receive this form at the end of the year or at the end of your employment, together with your payslip.
- Your tax ID (Steuer-ID, TIN, or Steuer-Identifikationsnummer), your unique 11-digit number that you received by snail mail, about six weeks after you did your Anmeldung at the Bürgeramt. You can also find your Steuer-ID on your payslip.
- Your tax number (Steuernummer), your individual tax number assigned by your local tax office to catalog your documents faster. If this is your first tax declaration, you can enter ‘neu’ in this field; otherwise, you can find it on your last tax assessment (Steuerbescheid).
- Your German bank account details (IBAN, BIC) for your refund.
- Proof of any income from outside of Germany. Most countries have a ‘no double taxation agreement’ with Germany.
- Your receipts of any work-related, special, or exceptional expenses (see above)
- Details of your children (if applicable)
- Amount and period for which you received child benefits (Kindergeld). If your application for child benefit was rejected, you need to provide the rejection letter.
- Expenses for daycare or education, e.g., Kindergarten/Kita
- Any other income or benefit, e.g., parental allowance (Elterngeld)
When is the German tax return deadline?
The German tax year follows the calendar year and runs from January to December. The German tax return deadline varies depending on a few factors:
- Mandatory tax declaration: You have to submit your tax declaration between January 1st and July 31st of the following year (so up to July 31st 2022, for the tax year 2021). You can apply for an extension once with the local tax office (Finanzamt).
- Voluntary tax declaration: You can hand in your tax declaration and apply for refunds up to four years. So in 2022, you can still declare your taxes for 2021, 2020, 2019, and 2018.
- Through a tax advisor or Lohnsteuerhilfeverein: If you choose to use a tax adviser to file your tax return, you have even more time. The deadline for a tax adviser is the end of February of the following year (so February 28th 2023, for the tax year of 2021)
How long does it take to get your tax refund in Germany?
Once you have filed your tax return, it usually takes between two to six months for the local tax office to process it and send you your tax assessment (Steuerbescheid). This paper will inform you whether your tax return was approved or changes were made. In case of a refund, the amount will be directly wired to your bank account, usually when the tax assessment is sent.
Even if you are not obligated to file a tax declaration, you will most likely benefit from it with a tax refund. You have different options to file that tax return. The easiest and cheapest way for expats is to use one of the English online tax return softwares. In a more complicated financial or employment situation, a tax consultant is the only person who can give you correct and personalized advice.
Disclaimer: Neither myself as the author of this article, nor Simple Germany as a business, are qualified to provide tax advice under German law. We cannot provide specialist tax services beyond any of the general tips contained herein. For tax advice, we strongly recommend you consult a professional tax consultant.