Filing your taxes can be stressful, especially if you’re not familiar with the German tax system. We’ve put together this simple guide to walk you through it.
7 min read
Tax season can be a stressful time of year — particularly if you're new to the country or dealing with the German tax system as a non-native speaker. However, if German isn’t your native language or you’re filing taxes in Germany for the first time, there’s no need to worry. We’ll walk you through everything you need to know to get your declaration in shape.First, let’s start with the good news: not everyone in Germany needs to submit a tax declaration. If you’re employed full-time, for instance, there’s a good chance you won’t have to — but filing a voluntary tax return could be worthwhile financially. However, tax declarations are compulsory for freelancers and the self-employed, or anyone receiving any kind of welfare benefits including what’s known as “wage replacement benefits” (Lohnersatzleistungen).
What you’ll need to submit your tax declaration
Tax number (Steuernummer): If you don’t already have one, submit your first German tax declaration and your district’s tax office (Finanzamt) will issue you a tax number. Note that if you move to a new district, you will 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 address with the local registration office (Bürgeramt). This number is yours for life, so keep it safe!ELSTER: If you’re self-employed, tax declarations must be submitted electronically using the ELSTER tax portal online. Employees or pensioners can choose to submit a paper copy instead. All you have to do is 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 available in German and English, and there are a few online tax tools available in English, too, such as Taxfix or Steuergo. You can also outsource your declaration to a tax consultant (...more on that later).
If you’re employed, you’ll also need your annual wage and tax statement (Lohnsteuerbescheinigung). This should be sent to your home address 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, or in case the tax office needs additional information from you.
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Generally speaking, if you’re a full-time employee within a company, submitting a yearly tax declaration isn’t usually mandatory. It’s only necessary in specific circumstances, like if you freelanced in addition to your full-time job, or received “wage replacement benefits” (Lohnersatzleistungen) while you were employed.That said, it’s often worth your while to submit a tax declaration even if you're in full-time employment, because doing so might result in a tax refund — around €1,000 on average.As stated above, tax declarations are mandatory for the self-employed, those who receive any kind of welfare benefits, those who received more than €410 in “wage replacement benefits”, those who 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). In certain cases, those who are married or have a common-law partner are also required to submit a tax declaration.
Tax declarations for employees
The annual wage and tax statement issued by your employer (Lohnsteuerbescheinigung) contains all the necessary information you’ll need to file a declaration, provided you have no extra income sources. 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, donations to charities, and childcare costs that can lower your taxable income and increase your chances of receiving a tax refund.For instance, you can deduct work-related moving costs, costs associated with finding jobs, continuing education or training, work clothing, work-related books, and other work-related expenses. You can even deduct the costs of traveling to and from work, regardless of whether you drive a car, ride a bike or take public transportation.Employees submitting a tax declaration need to fill in the following forms in ELSTER:
Main or simplified income tax declaration form (ESt 1 A or V)
Income as an employee (Anlage N)
Health and pension insurance (Anlage Vorsorgeaufwand)
Parents should make sure to fill out the “Anlage Kind” form. Did you invest money and earn capital gains like dividends from international investments, or interest on an international savings account? Then the “Anlage KAP” form is relevant for you, too.
Tax declarations for freelancers
Things get a lot more complicated around tax season when 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)
Health and pension insurance (Anlage Vorsorgeaufwand)
Self-employed tradespersons (Gewerbetreibende) need to fill out:
Main income tax declaration form (ESt 1 A)
Self-employed income (Anlage G)
Trade tax (Anlage GewSt 1 A)
Revenue statement (Anlage EÜR), provided your turnover is below €800,000 and your revenue is below €80,000
Health and pension insurance (Anlage Vorsorgeaufwand)
Freelancers and the self-employed who charge VAT also need to submit a separate annual VAT declaration (Umsatzsteuererklärung) — however, small business entrepreneurs (Kleinunternehmer) are exempt from this.
Getting help
If you feel stressed or overwhelmed, you can always pay a tax consultant to do it for you — typically for a percentage of your total income. Keep in mind this is total income, and not total profit. A more affordable alternative might be turning to “income tax help organizations” (Lohnsteuerhilfevereine) for assistance.There are also a variety of free tools and software available that you can use to calculate your taxes and prepare your declaration. And if you speak German, you can even visit your local tax office to ask for advice.
When are tax declarations due?
Mandatory submissions are due by July 31 of each year. However, if you receive professional help from a tax consultant or an income tax help organization, this deadline is extended by seven months. If you’re voluntarily submitting your declaration, you have up to four years to do it (counting from the end of the fiscal year). Don’t panic if you’re running late — you can always ask your local tax office for an extension.
What happens after I submit my declaration?
Two to six months after you submit your application, you’ll receive a tax assessment (Bescheid) detailing any refunds you'll receive. If you’re a freelancer or are self-employed, it will also tell you what tax prepayments you’ll need to make throughout the coming year.
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