Tax Return for Employees in Germany, its a very complicated topic but it doesnt have to be. In this article I will cover the most important information you need to know as a Employee in Germany when it comes to filing a tax return in Germany.
Why submit a tax return in Germany?
It is possible that as a taxpayer, you have paid too much tax in advance, which can result in a tax refund. However, it is also possible that you have paid too little tax, which means you may have to pay additional taxes.
On average each employee in Germany gets an average of €1072 back from the Government if they file a tax return in Germany. This amount is just the average. If you can show valid expenses (discussed in this article) then you can get even more in your Tax return.
Documents Needed to File a Tax Return in Germany
To file a tax return, you will need your 11-digit tax identification (ID) number, which you receive in the mail after registering in Germany. You may also need your 13-digit tax number, which can be found on your salary slip.
Your tax numbers may change if you move, but your tax ID number will always remain the same. If you do not have your tax ID or tax number, you can contact your local tax office to obtain it.
Effect of Tax Class on German Tax Return
There are six tax classes in Germany, but your tax class does not affect your tax return. The amount of taxes you are required to pay remains the same. It only affects the amount of tax you pay in advance, which is shown on your income tax statement (Lohnsteuerbescheinigung).
Changing Tax Class
Since January 1st, 2020, married couples are allowed to change their tax classes multiple times throughout the year to choose the most beneficial combination. You can apply for this change at your local tax office, and it will take effect in the following month.
Filing Joint Tax Return in Germany
Married or officially partnered couples can either file a joint tax return with your spouse or file an individual tax returns.
If married couples choose to be assessed together. They will be treated as one person: they file a one joint tax return, receive one tax assessment notice (Steuerbescheid). And if a tax refund is granted, it will only be transferred to one bank account.
How is income tax calculated in Germany?
If an individual’s income in Germany exceeds the basic tax-free allowance (Grundfreibetrag), they are required to pay income tax (Einkommensteuer).
The basic tax-free allowance serves as a means of ensuring a minimum standard of living and the amount is:
- €10,347 for 2022
- €10,908 for 2023.
Paying taxes in Advance
The implementation of wage tax (Lohnsteuer) was established to simplify tax collection for the largest group of employees. This form of taxation involves an advanced payment on your annual income tax and is automatically deducted from your monthly gross wage by your employer.
Your personal electronic wage tax deduction details (Lohnsteuerabzugsmerkmale or ELStaM) are used to calculate your wage tax. That is then transmitted to the tax office (Finanzamt) on a monthly basis.
Income Tax Statement for Tax Return as a German Employee
You can find information about your tax deductions on your monthly pay slip (Gehaltsabrechnung). At the end of each calendar year, your employer will submit your annual income tax statement (Lohnsteuerbescheinigung) to the tax office. They should do it by the end of February at the latest. And provide you with either a printout or electronic copy. This income tax statement will be used for your tax return.
If you do not have this income tax statement, then you should contact your employer. If you cannot get it from your employer then you can contact your finanzamt. The finanzamt however might not be able to give you the details if your employer did not submit it to them.
Should Employees in Germany Submit a Tax Return?
Employees who are in Tax Class 1 or tax class combination of 4/4 generally do not need to file a tax return in Germany. But even in these tax class combinations you might have to submit a tax return.
If you receive wage replacement benefits totaling more than 410 euros in a given year, you are obligated to file a tax return (Pflichtveranlagung) in the subsequent year.
Wage Replacement Benefits in Germany
Wage replacement benefits in Germany include
- Unemployment benefits (Arbeitslosengeld)
- Short-term work benefits (Kurzarbeitergeld, more in section 5: Short-term work & Short-term work benefits)
- Maternity benefits (Mutterschaftsgeld)
- Parental benefits (Elterngeld)
- Sick pay (Krankengeld)
- Transitional allowance (Übergangsgeld)
- Injury benefits (Verletztengeld)
- Subsistence payment (Unterhaltsgeld) as a supplement
- Care assistance benefits (Pflegeunterstützungsgeld)
- Employer supplements to wages and salaries (Arbeitgeberzuschüsse zum Arbeitsentgelt)
Deadline to Submit a Tax Return in Germany as an Employee
Individuals who are obligated to file a tax return must do so before July 31st of the next year. Failure to comply with this deadline may result in penalties.
In the event that the deadline falls on a weekend or public holiday.Iit will be extended to the subsequent workday. Since the last couple of years due to the pandemic situation, the deadlines for tax returns between 2020-2023 have been extended.
The deadline to submit your 2022 tax return in Germany is October 30th 2023 . And the deadline to submit your 2023 tax return in Germany is August 31st, 2024. These deadlines are for people who submit the tax return on their own. Filing a tax return with a tax consultant gives you additional time.
What are the penalties of not filing a tax return in Germany?
If the deadline is missed, the tax authorities (Finanzbehörde) may impose a late payment penalty. This late fee is 0.25% of the assessed tax for every month (or partial month) past the deadline. The minimum penalty being of 25 euros.
Those who are required to submit their tax returns and choose to ignore reminders from the tax office may be issued with an estimated tax assessment. This is often to a disadvantage. It is important to note that even if you receive an estimated tax assessment, you must still submit your tax return.
Request Extension for Tax Return in Germany
Requests for extensions on mandatory tax returns must be submitted and approved before the deadline. These kinds of requests are usually granted only in exceptional cases.
Employees in Germany who are not required to file but file a tax return voluntarily have up to 4 years to file their returns. For example you can submit your 2019 tax return till the end of 2023. Your deadline is December 31st, 2023, and this deadline remains fixed at December 31st, four years later with no extensions.
Are receipts required for a German Tax Return?
Prior to 2017, it was mandatory to provide receipts or invoices for all expenses while submitting your tax return. Nevertheless, this requirement has been lifted, and you are now only required to maintain the original receipts in case the tax authority asks for them. These receipts may comprise bills, receipts, certificates, and purchase contracts.
If you want to get money back from the government for certain things like working from home, paying a lot for medical care, or giving a lot of money to charity, it’s a good idea to give them proof of how much you spent. This can be in the form of receipts. By doing this, it can help you get your money back quicker and save you some time.
How long do you need to keep the receipts after submitting a tax return?
You need to keep all the receipts and bills that are related to your taxes until your tax return is completely done. This happens about a month after you get a notice from the tax office about how much you owe or will be refunded. You can disagree with the notice and want to fight it, then you need to keep these receipts until the case is finished.
If you gave money to charity, you should keep the receipts for one year after you receive the notice. If it’s for things you bought for your home, you should keep them for two years after you paid for them. Some receipts, like those for medical expenses, may need to be kept for even longer.
What expenses can be claimed in a Tax Return in Germany as an Employee?
Lets discuss the income related expenses or Werbungskosten in detail so that you know exactly what expenses you can claim in your tax return in Germany.
Commuting expenses (Fahrtkosten)
Getting to work is usually one of the biggest expenses for people who work. In the past, employees could get money back for some of the expenses of getting to work, by claiming 30 cents for every kilometer they traveled to work (one-way). This was called the “commuting allowance.” This applied to all types of transportation.
However, from January 1st, 2021, the amount you can claim increased to 35 cents for every kilometer traveled, and from January 1st, 2022, until the end of 2026, it will increase again to 38 cents per kilometer (starting from the 21st kilometer one-way).
There is a limit to how much money you can claim each year, which is 4,500 euros. But there are some exceptions where you might be able to claim more, like if you have a second home for work, if you spend more than 4,500 euros a year on public transportation, or if you use your own car or a company car to travel.
Work equipment (Arbeitsmittel)
As an employee in Germany you can also claim work equipment in your tax return. If you need to buy things for work like a computer, phone or tools, you can get some of the money back by claiming it as a work expense. But you can only get all the money back if you use it almost only for work (90%). If you use it for personal things too, you can only get back the money for the work part. There are two ways to claim this money: you can either get a fixed amount of 110 euros or show proof of how much you spent.
You can claim up to 800 euros (including taxes) every year for work-related purchases. If you spend more than that, you have to spread the cost out over a few years, depending on what you bought. The government has a list of how many years you can spread it out for.
How to Buy a mobile or a Computer tax Free in Germany
If you buy a computer or other electronic devices after 2021, you can deduct the full cost in the same year you bought it. But if you bought it before 2021, you have to spread the cost out over 3 years. It’s important to keep all your receipts and invoices. You can also get money back for repairs and maintenance of your work equipment.
Home office tax return in Germany
Starting in January 2023, you can get money back for working from home, and it will be available from now on. You can get up to 6 euros per day (before it was 5 euros) and for up to 210 days per year (before it was 120 days). The most you can get back is 1,260 euros per year (before it was 600 euros).
The rules about working from home have also changed. Before, you could only get money back for having a home office if you didn’t have any other place to work. But now, you can get money back even if you work in other places too.
For example, if you go to an office and then work from home, you can still get money back for the time you spent working at home. If your home office is the main place where you work, you can get all the money back or get a fixed amount of 1,260 euros per year.
Job application costs (Bewerbungskosten)
If you spend money on applying for jobs, you can get some of it back as a tax deduction, even if you don’t get the job. If the expenses are not included in a fixed amount given by the tax office, you will need to show proof of how much you spent. The tax office has some fixed rates to estimate the average cost of things like writing a job application.
You can also get money back for things you bought to help you apply for jobs, like paper, envelopes, or folders. You can also get money back for things you did to promote yourself, like making a website or getting a professional photo taken. If you have to travel for a job interview, you can also get money back for things like parking or overnight stays.
If you need to get documents translated or get training for a job, you can also get money back for things like courses, books, or translations. These costs surely add up if you submit a tax return in Germany as an Employee.
Telephone and internet costs
You can deduct telecommunication and internet costs if they were used for work. You can choose between a flat rate deduction of 20% of the costs, with a maximum of 20 euros per month, or providing individual proof of the costs and percentage of personal and professional use, which has no limit. If your professional telecommunication/internet costs exceed 20 euros per month or the tax office doesn’t accept the flat rate, it’s worth providing individual proof.
Lesser known expenses Employees can claim in Tax Return in Germany
There are other less common expenses that you can show in a Tax Return
Like: Double houshold management ,Child benefits Insurances, Unemployment insurance liability insurance risk insurance ,Capital gains and many other.
One of the biggest expenses that you can claim in your tax return as an expat in Germany is the remettence you send back home to your family. This is called Maintenance declaration in Germany which I have discussed in a detailed article.
Should you file a tax return in Germany? the answer is definitely YES.
You should definitely look into filing a tax return in Germany as an Employee. As I mentioned earlier you can get an average of €1072 back and in many cases even more. My favourite tax return software is Wundertax* but there are many others which I have discussed in my guide on the best tax return softwares in Germany.
*Affiliate link, I may earn a commission if you use the link and make an account at no additional cost to you
Disclaimer: None of the content in this article is meant to be considered as investment advice, as I am not a financial expert and am only sharing my experience with stock investing. The information is based on my own research and is only accurate at the time of posting this article but may not be accurate at the time you are reading it.