Did you know that a tax return in Germany has given back an average of €800 to €1,000 to a German taxpayer over the last years? As you can see, anyone who doesn't go through a tax return in Germany is truly giving away real cash!
But being an international in Germany, your tax return proves to be a hurdle: on the one hand, there's the language as a barrier; on the other hand, the German tax system differs from the one you're familiar with. But don't fret, once you've mastered your tax return in Germany, the money bliss quickly fades away the stress.
Let's go step by step through the tax return in Germany. With our checklist, you won't miss a detail, promise!
It’s as simple as that: there's money waiting to be picked up from you!
Disappointment strikes many internationals when they hold their net salary in their hands for the first time at the end of the month. After all, your employer automatically deducts income tax from your gross salary and transfers your social security contributions directly to the insurance company. So once all payments have been received by the tax office, a relatively slim net salary will land in your bank account.
In fact, did you know that Germany is the second most heavily taxed country in the world right after Belgium? By the time your first net salary arrives, you'll clearly feel that your net salary becomes a lightweight version of your gross salary.
Here's the good news! You can file your tax return at the end of the year and with a little luck, you'll get money back for taxes you paid too much!
As a matter of fact: to be precise: In 9 out of 10 cases the taxpayer gets money back after filing the tax return!”
So, what are you waiting for?
First things first: At which point do I have to file a tax return and when is it voluntary in Germany?
Short and sweet, you cannot avoid filing a tax return in Germany if you:
Determining whether you should file a tax return as a student in Germany largely depends on your income situation. You should consider filing if:
If these scenarios apply to you, filing a tax return becomes a necessity. Even if your income is below the tax-free threshold, it's a smart move because your employer might have deducted income tax from your earnings, which you can potentially reclaim at the end of the year.
Regardless of your income level, filing a tax return is a savvy financial choice for students in Germany. Here's why:
In Germany, a tax refund means you can receive money back from the government when you've paid more income tax than required. This makes filing a tax return essential. You can generally claim a tax refund if:
Tax deductions in Germany, known as "Steuerabzüge" or "Steuerermäßigungen," are expenses or allowances that can be subtracted from your taxable income, reducing the overall income subject to taxation. These deductions lower your tax liability, resulting in a lower tax bill.
In Germany, there are various types of tax deductions, including:
Work-related expenses: Commuting costs, expenses for professional development, and costs associated with a home office.
Child-related expenses: Childcare costs, school fees, and other child-related expenses.
Healthcare Costs: Medical and dental expenses, including insurance premiums and out-of-pocket expenses.
Education Expenses: Tuition fees and educational expenses, particularly for vocational training and higher education.
Donations: Contributions to recognized charities and non-profit organizations.
Homeownership: Mortgage interest, property tax, and home improvement costs.
Pension Contributions: Payments into retirement accounts and pension plans.
Special Deductions: Additional deductions such as disability-related expenses or care of elderly relatives.
Preparation is key! So make sure to add the one or two things to your to-do list before you file your tax refund in Germany:
1. Your tax number (Steuernummer)
13 digits given to you as a taxpayer by the local tax office. Your tax number is based on your place of residence and will change as soon as you move and a new tax office is in charge of you. You can find your tax number in the top left-hand corner of every income tax assessment and on your income tax certificate issued by your employer. Watch out: your tax number (Steuernummer) is not the same as your tax identification number! Your Tax Identification Number (Steueridentifikationsnummer) is a permanent and nationally uniform identification number that you receive upon registration in Germany.
Are you a freelancer in Germany? Then you got your tax number at the tax office (Finanzamt) and put it on all your bills so that you can get paid.
2. Double taxation: true or no? All your income, no matter if it is domestic or foreign, has to be taxed. And vice versa, your home country may also require you to pay taxes. With many countries, Germany has tax treaties so that you don't have to pay double taxes on your income. Make sure that you don't have two tax offices chasing you!
3. Get all forms Each taxpayer has a different fiscal background and so there are forms for all of us. By the way, you can deduct many things from your taxes in Germany - whether church tax or your donations. Should you have distinct language barriers, it pays off to use a tax consultant, at least for the first time.
4. Register with ELSTER Fill out your tax refund in Germany digitally in no time with ELSTER!
5. Meet your deadlines Your tax refund deadlines depend on whether you have to file a voluntary or mandatory tax return.
Check? Check! Let's go through your tax return step by step.
There's no doubt, preparation is a must: Before you rush to fill out your tax return in Germany, you need to gather all the relevant forms. A tax return in Germany is obviously an individual matter, everyone has a different fiscal background.
Your task now is to find the relevant forms that are essential for your individual tax return in Germany:
Don’t forget, after all you can deduct many professional expenses from your tax declaration in Germany, as well as church tax or other expenses.
You can even offset labour costs around your house (even as a tenant!) against tax. So if you have a cleaner, gardener or craftsman, you can deduct these from your tax bill. Make sure you keep all receipts, as the tax office may want to have your expenses documented.
Did you find out which forms you need for your tax declaration in Germany? Then get your relevant forms either at your local tax office or at the citizens' office. Simply visit the homepage of the tax office in your city.
It's much easier - and truth to be told, more “2020ish” - with the electronic tax return. The top choice is the free tax return program ELSTER, a software that simplifies your tax return and gives you tips on filling it out. On ELSTER you can download the necessary forms or fill them out digitally, print them out and send them to the responsible tax office.
By the way: In Germany, taxes and tax declarations are handled by the individual federal states. This means that your local tax office is responsible for your tax return. At the Federal Central Tax Office (Bundeszentralamt für Steuern) you can find your local tax office.
When it comes to the deadline for your tax return, it makes a big difference whether you submit it voluntarily or are obliged to do so.
Anyone who files a tax return voluntarily can wait 4 years to complete it and submit it to your local tax office. This means for you: you have to submit your tax return from 2016 by 31.12.2020. A real bliss for procrastinators!
It’s different if you don't have a choice but to file a tax return.
With a mandatory tax return you have until 31 July each year to submit your tax return for the previous year.”
In fact, you even have until 31 December of each year to file your tax return for the previous year when a tax consultant takes over for you!
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