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Paying your taxes in Germany – Made simple for expats

As an expat, you’ve probably wondered about the rules when it comes to paying taxes in Germany. Taxes for expats can be especially complicated, but we’ve broken down the basics to help you understand the process.

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Taxes are a foreign concept to most people, no matter the country. But the system for paying taxes in Germany is pretty straightforward, making the lives of expats in Deutschland just a bit easier.

Before jumping through all the hoops to file a tax declaration, it’s important to do your research. First, consider if you actually need to file. Once you’ve decided that you need to, or that you’d like to, then you can figure out which tax class you belong to. Finally, think about whether you’re ready to file them yourself, or if you’d like a little professional help. Keep reading to find out everything you need to know about the tax system in Germany.

Step 1

Do you need to file taxes in Germany?

Not all employees and residents are required to file taxes in Germany. In fact, in most cases you’ll only need to file a tax declaration if you’re hoping to get a return.

There are two examples of situations in which you might be able to forego the yearly stress of dealing with filing a declaration for your income tax in Germany.

If you’re earning less than 9,000 EUR per year, or 18,000 if filing jointly, you’re not required to submit a tax declaration* (numbers as of 2018).
If you’re an employee and your sole source of income is from one employer.

Step 2

Identify which German tax bracket you belong to

There are six possible classifications for your income tax in Germany. These classes will determine the tax rate you’ll pay on your salary each month. Check the table to see which one applies to you.

Single, widowed, divorced
Single parent
Married, the higher-earning spouse
Married, earning the same as your spouse
Married, the lesser-earning spouse
Working two jobs

For married expats, the Steueramt (Tax Agency) will usually classify both partners in Tax Class 4 by default, if no salary information is provided. However, it might be in your best interest to clarify which spouse earns more; you could be eligible for a larger tax rebate by adjusting your tax classes.
The majority of single expats paying taxes in Germany will be registered in Tax Class 1. However, if you’re earning money from more than one source, you’ll be in Tax Class 6.

Step 3

Registering your income tax in Germany

Today, there are plenty of tools and resources to help expats file their taxes in Germany. If you’re the DIY type, try your hand at ELSTER, Germany’s online tax declaration tool. Like TurboTax or other self-service tax products, this is the simplest tool used by Germans to get their tax declaration filed. But if your German is a little rusty, you may prefer other programs. Check out Wundertax for an English solution – they offer a tool to make taxes for expats in Germany a little simpler. Taxfix.de offers the same.

If you’re not sure about filing them on your own, never fear. You’ve got two other options: you could get a private tax advisor (Steuerberater) or join the Lohnsteuerhilfeverein.

A tax advisor can offer you a more tailored solution but will often cost a bit more. However, if you have more specific questions, multiple sources of income or a complicated case, you might consider finding a Steuerberater to help you get your taxes filed.

If you’d like to have someone in your corner to answer your questions year-round, the local Lohnsteuerhilfeverein can get your taxes in Germany sorted and address all of your concerns. It’s an organization that helps its members with all sorts of tax-related issues, and you can become a member by paying a monthly fee based on your annual income. This option might be attractive if you’d like more support at a lower price.

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Extra tips: The best deductions for your taxes in Germany

Transportation costs

Depending on how you travel to work and how far your home is from your workplace, you may be able to deduct your transportation costs from your income tax. Save your public transportation passes or receipts.

Education and training

If you’ve taken any classes, seminars, or online courses this year, you can deduct them. The same goes for any other training materials you may have purchased, e.g. textbooks, workbooks, etc.

Work tools

Did you purchase a new laptop? It could be deducted. Did you upgrade your phone? That could be deducted. When deciding whether something you use privately counts as a work expense, the rule is: did you use this tool professionally more than 50% of the time? If you can defend this claim, write it off.

Job search costs

If you traveled within Germany while pursuing a new job, those travel costs can be written off. This includes train tickets, rented cars, flights, and hotels.

Childcare

When your children are being cared for while you’re at work, daycare or Kita are considered deductible expenses.

Your home office

Working from the couch? Calculate how much of your total flat is used as a “home office” – maybe your living room, for example – and use that to determine the price of your rent for your home office. Additionally, don’t forget to add in the cost of utilities for that square footage!

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