How to do your taxes in Germany

Tax season comes back every year like clockwork, and if it's the first time you're actually dealing with the German tax system, it might be a bit overwhelming. If opening ELSTER sends shivers down your spine, don't panic! We’ve put together this little guide with all the basics for helping you file taxes in Germany for the first time. 

Who needs to file a tax declaration? 

Let's start with the basics. If you're employed full-time, you probably won't have to submit a tax return in Germany. However, under specific circumstances, you'll have to do it anyway. For example, if you had a freelance side gig in addition to your full-time job or couldn't work for some time because of health reasons. The same applies if you've been unemployed or just had a baby. In general, you'll always have to submit a tax declaration if you received "wage replacement benefits" (Lohnersatzleistungen) for more than €410 while employed. If you receive a letter from the tax office, even if none of these categories applies to you, you'll still have to file a tax declaration. It's also mandatory for freelancers and self-employed people. 

Most of the time, if you don't fall into these groups, it's worth submitting a tax declaration anyway, as you might get a tax refund when deducting your expenses. Regular employees who file their tax returns receive an average of €1,051 back. Not bad, right? Also, keep in mind that in the last two years, the German government increased the reimbursements available for several categories like work-from-home and commuting expenses, so you might be entitled to receive even a bit more money than usual. 

What do you need?

Photo by Jeff Stapleton

You need to have a few essential things when declaring your taxes in Germany. 

1) Steuer-Identifikationsnummer, it's a number you'll automatically receive once you register at the local Bürgeramt. It will be the same for your entire life, so be careful not to lose it. 

2) Steuernummer, the tax number. As an employee, you won't need it; it only applies to freelancers or self-employed people, and it's provided by the Finanzamt. If you haven’t received it yet or lost it, submit your tax return, and your district office will forward it to you. In case you move to a new district, you'll receive a new number.

3) Lohnsteuerbescheinigung, it’s your annual employment tax statement. As a freelancer, you'll have to gather details of all your earnings and expenses with the required receipts and invoices.  

4) Your German bank account details to get your tax refund.

In addition, you'll need to add the receipts of all your deductible expenses (you can find some examples here) and any proof of income from outside of Germany. If you have kids, make sure to include all the details about them, such as Kindergeld, or the expenses for the kids' daycare (Kita). Remember to include any other income or benefits, like a parental allowance.  

How do you do it?

Now that you know what you need to declare your taxes, you probably want to know how to do it. Luckily, there are several ways to do it.

If you are an employee, the easiest option is to use an online software tool. As a Vivid user, the quickest and easiest way is to use Steuerbot directly in the Vivid app. You can quickly find the Steuerbot under ‘Vivid Services’ in the ‘Rewards’ tab. In case your tax refund exceeds €100, or if you fall into the categories that are obliged to file a tax return, you'll only have to pay a fee of €19.90. If, on the other hand, your refund is less than €100, and you aren't among those that have to file a tax return, it'll be completely free of charge! Not bad, right? You can also choose to register with a Lohntsteuerhilfeverein, one of the German tax assistance associations. You usually pay an annual fee that varies according to your salary, and they take care of everything. Otherwise, you can opt for a tax advisor to get personalised advice, which is the most expensive alternative.

The last option is to use the ELSTER portal. It's the official platform of the German government for uploading your tax return, and it's pretty complicated and time-consuming. After creating an account, you'll have to fill out several complex German bureaucratic forms, so if you aren't very familiar with the language, make sure there's someone to help you. 

What about the deadline? 

Photo by Olya Kobruseva

This year there's no need to stress about timing! The deadline for filing tax returns for 2021 has been postponed to the 31st of October 2022. Usually, the deadline for mandatory declarations is the 31st of July of the following year. Voluntary declarations can be filed over the next four years. For example, the deadline for this year is 31st July 2025. If you need more time and have to submit a mandatory declaration, you can request an extension at your local Finanzamt. In any case, respecting the due dates for voluntary and mandatory tax declarations is essential. Otherwise, once the deadline has passed, the tax office will charge you a penalty fee or reject them in the case of voluntary ones. 

What happens afterwards?

Once you submit your tax declaration, the Finanzamt will need between two and six months to process it. After that, you'll receive a tax assessment (Bescheid) with the details of your refunds, and the money will be automatically transferred to your bank account. 

Tax season is always a hassle; if you have any doubts, we always recommend you to consult with a tax advisor. Hopefully, with our help, the entire process will be a bit less overwhelming, and you'll be able to tackle this tax season with ease.

Any opinions, news, research, analyses, or other information contained on this website are provided as general market commentary, and do not constitute investment advice, recommendations nor should be perceived as (independent) investment research. The author or authors are employed by Vivid and may be privately invested in one or several securities mentioned in an article. Vivid Invest GmbH offers as a tied agent of CM-Equity AG the brokerage of transactions on the purchase and sale of financial instruments with the exception of those in the area of foreign exchange brokered by Vivid Money GmbH.