Is Filing a Tax Declaration in Germany Mandatory for You?
In Germany, the “Steuererklärung” (tax declaration) is a topic that concerns both locals and expats. While regulations can shift annually, the fundamental rule is this: if you’re a standard employee with only your regular salary, you’re generally not obligated to file. However, simply because you don’t have to file doesn’t mean you shouldn’t consider it. The average tax return in Germany hovers around a substantial €1,000, a compelling reason to explore your options.
However, certain circumstances mandate filing. You must file if:
- You receive additional income exceeding €410 per month, such as parental allowance.
- You’ve received extraordinary payments, like severance pay.
- Your marital status changed, involving remarriage or specific tax class combinations (III/V).
- You’ve earned income from abroad, including from a previous relocation or rental properties.
- You’ve received a “Freibetrag” (tax allowance).
- You’ve engaged in “Kurzarbeit” (short-time work).
- The Finanzamt (tax office) explicitly requests a declaration.
- You are a freelancer or self-employed.
Remember, understanding your tax class is crucial. If you’re unsure, check out our detailed guide on German tax classes.
Why File a Tax Declaration If It’s Not Required?
The primary reason to file voluntarily is the potential for a tax refund. Many individuals find they’ve overpaid taxes throughout the year. While it’s not “free money,” it’s certainly your money returning to you. The average refund of around €1,000 serves as a powerful incentive. However, it’s crucial to acknowledge the potential for owing additional taxes if you’ve underpaid.
Employees in Germany automatically benefit from a €1,000 expense allowance, which is already factored into your monthly payslip. This allowance covers common expenses like commuting. Don’t confuse this with the average €1,000 refund; they are separate. If your actual expenses exceed this allowance, filing a declaration becomes highly advantageous.
How Do You File a Tax Declaration in Germany?
You have several options:
- Do It Yourself: While possible, it’s often complex and time-consuming, especially with the intricate nature of German tax law.
- Tax Return Software: User-friendly software, some available in English, simplifies the process. These tools offer guidance and streamline filing. Many people use and recommend the tax software from “steuergo”. If you want to know more about the different Tax software available, you can check out this video: https://www.youtube.com/watch?v=0
- Tax Consultant (Steuerberater): The most comprehensive option, especially for complex cases, but also the most expensive. You can find English-speaking tax consultants through services like Your Expert.
- German Tax Assistance Association (Lohnsteuerhilfeverein): A middle ground between software and consultants, offering assistance for an annual membership fee.
What Are the Deadlines and How Long Does It Take?
Tax declaration deadlines vary based on whether filing is mandatory and the filing method. Tax consultants and associations typically have extended deadlines. For precise dates and required documents, consult our detailed guide.
The processing time for tax returns varies, averaging two to six months. Once approved, you’ll receive a tax assessment (“Steuerbescheid”) and the refund will be deposited into your account.
Which tax filing method do you prefer, and why? Share your experiences in the comments below!
Conclusion:
Navigating the German tax system can seem daunting, but understanding your obligations and options empowers you to make informed decisions. Whether you’re a seasoned resident or a newcomer, clarifying your personal tax obligations, identifying deductible expenses, choosing the right filing method, and staying informed about deadlines are crucial steps. Remember, exploring your tax return potential can lead to unexpected financial benefits. ETAINFI can further clarify your personal tax obligations, help you determine your filing requirements, assist in identifying deductible expenses, evaluate your options, connect you with suitable resources, and help you stay informed about deadlines and track your tax return progress.
