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How to submit a tax declaration in Germany

The tax time of year can be a stressful one—particularly if you’re a non-native dealing with the German tax system. To help you out, we’ve put together this useful guide to walk you through it.

First, let’s start with the good news – not everyone in Germany needs to submit a tax declaration. If you’re in full-time employment, for instance, there’s a good chance you’ll be off the hook. However, tax declarations are compulsory for freelancers and the self-employed, or anyone receiving any kind of welfare benefits.

What you’ll need to submit your tax declaration

Tax number (Steuernummer): If you don’t already have one, simply submit your first German tax declaration and your district’s tax office (Finanzamt) will issue you a tax number. Note: If you move to a new district, you should automatically be issued with a new number when you register in the area.

Tax identification number (Steuer-Identifikationsnummer): You’ll automatically receive a tax ID number after you register your German home address with the local citizens’ registration office (Bürgeramt). This number is yours for life, so keep it safe!

ELSTER: Tax declarations must be submitted electronically using the online tax portal ELSTER. Sign up on the website and you’ll be sent a code in the mail, which you use to finish setting up your account. ELSTER is only available in German, but luckily there are a few English-language online tax tools available, such as Steuergo, and you can also outsource your declaration to a tax consultant (...more on that later).

What else? If you’re employed, you’ll also need the annual wage and tax statement (Lohnsteuerbescheinigung) that’s sent to your home each year by your employer. Freelancers will need details of all their earnings and expenses, backed up by the corresponding invoices and receipts. You don’t have to submit this paperwork, but you do have to keep it for 10 years in case you get audited.

Who has to submit a tax declaration?

Generally speaking, if you’re a full-time employee within a company, submitting a yearly tax declaration isn’t compulsory, or only compulsory under certain circumstances such as having worked freelance or receiving benefits at the same time as your full-time job.

That being said, it’s often worth your while to submit a tax declaration even if you are in full-time employment, because doing so might result in a tax refund. Tax declarations are mandatory for the self-employed, those who are married or have a registered partner, or those who receive any kind of welfare benefits, had more than one employer in the past financial year, or earned more than €410 per month in addition to their regular employment (e.g. income from a rental property).

Tax declarations for employees

The annual wage and tax statement issued by your employer (Lohnsteuerbescheinigung) contains all the key information for your declaration. Each item is numbered and matches the fields in ELSTER, so it’s just a case of filling in the blanks. On top of this, you also have the opportunity to declare additional work-related expenses and lower your taxable income, to increase your chances of receiving a tax refund.

For instance, you can deduct costs involved in moving house for professional reasons, applying for jobs, further education or training, work clothing, work-related literature, and many more. You can even deduct the costs of traveling to and from work, regardless of whether you drive a car, ride a bike or catch public transport.

Employees submitting a tax declaration need to fill in the following forms in ELSTER:

  • Main income tax declaration form (ESt 1)
  • Income as an employee (Anlage N)
  • Health and pension insurance (Anlage Vorsorgeaufwand)

Tax declarations for freelancers

Things get slightly more complicated if you work for yourself.

Freelancers (Freiberufler) need to fill in the following forms in ELSTER:

  • Main income tax declaration form (ESt 1)
  • Freelance income (Anlage S)
  • Revenue statement (Anlage EÜR) if your profit exceeds €17.500 per year
  • Health and pension insurance (Anlage Vorsorgeaufwand)

Whereas self-employed tradespeople (Gewerbetreibende) need to fill out:

  • Main income tax declaration form (ESt 1)
  • Self-employed income (Anlage G)
  • Trade tax (Anlage GeSt)
  • Revenue statement (Anlage EÜR) if your profit exceeds €17.500 per year
  • Health and pension insurance (Anlage Vorsorgeaufwand)

Freelancers and the self-employed who charge VAT also need to submit a separate annual VAT declaration (Umsatzsteuererklärung).

Getting help

Feeling overwhelmed? You can always pay a tax consultant to do it all for you. They typically charge a percentage of your total income (warning freelancers: that’s total income, not total profit!). There is also a variety of software and free tools you can use to calculate your tax and prepare your declaration. And if you speak German, you can ring up or visit your local tax office to ask for advice.

When are tax declarations due?

Mandatory submissions must be lodged by 31 July. If you’re voluntarily submitting your declaration, you have up to 4 years to do it. Don’t panic if you’re running late: simply ask your local tax office for an extension.

What happens next?

Two to six months after you submit your application, you’ll receive a tax assessment (Bescheid) detailing any refunds. If you’re a freelancer or self-employed, it will also tell you what tax prepayments you’ll need to make throughout the coming year.

Your money at N26

Freelancers and the self-employed can sign up for N26 Business for a free account that gives you free card payments worldwide and 0,1% cashback on your purchases. Need to submit evidence of your expenses? Make use of the N26 Web app to convert your statements into PDFs or easily exportable CSV files whenever you need to.

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