Submitting an income tax return declaration (Einkommensteuererklärung) in Germany
It’s only a month till 31st May which means that millions of self-prepared income tax return declarations are going to be shipped to the tax offices soon all around Germany.
As it seems I’m always looking for a trouble (aka more fascinating ways of doing something simple), and a few of my colleagues constantly encourage me to share experience on such workflows which might save you some time and money in Germany. And I’m not even talking about fun of dealing with it! As usual — I’m not a lawyer and not a tax consultant, if you have any questions or need more information I advise you to talk to them.
While there are a lot of specifics of filling out the declaration for each specific case, that would be very bad decision to overview all of the fields in this blog post (or even 20 blog posts), so I’d like to focus on tools you can use and some hints you can take advantage of. As usual — everything is based on my experience of submitting income tax return for 2014 and 2015 years (and got a 2014 one successfully processed in the tax services with return rate of ~99.5% of what I have asked for).
Do you need to submit it?
You’re obliged by law to submit the income tax return declaration in case of additional income (e.g. additional workplace, multiple sales of things on marketplaces, sales of securities, etc) or if you have a tax class which is not 1 or 4. Please consult your tax services web site for more information (e.g. Bayern Finanzamt).
Others are not required to submit it, but may do so to return some part of the taxes paid during the year. And I definitely encourage you to do so, as it’s a nice yearly bonus for spending a few hours putting numbers in the form!
There is also a very nice thing called Pauschalbetrag (a minimum amount of taxes to be returned, without providing detailed individual amounts or proof). This amount is used for administrative simplification, and it makes filling out simple declarations very fast because you don’t need to provide much data. For employees (or working professionals) the Pauschalbetrag would be calculated adding 1,000 EUR to yearly salary and getting increase in taxes paid from it (in comparison with normal yearly salary). There are some other conditions described e.g. here.
How much taxes can I get back?
It really depends on the situation. For example, if you’ve moved from another city/country during the year or have kids — quite a lot, that’s really hard to make any estimates.
From what I’ve seen on the internet the average is about 1,000 EUR, but can be more or less.
What are the deadlines?
If you’re submitting form on your own, you should do so before 31st May of the following year (so by 31.05.2016 for 2015 year).
If you’re using a tax advisor (Steurberater) they have a special conditions and can submit it before 31st December of the following year (so by 31.12.2016 for 2015 year).
If you’re obliged to submit the declaration, these strict deadlines MUST be met, but you can try to get an extension if you explain the reason to the tax services (e.g. if you’ve submitted documents right before the deadline and they require additional clarification or documents, they’ll give you a few more weeks to do so).
But if you are submitting a Steuererklärung voluntarily, you can do so for the last four years (proof in the Abgabenordnung (AO) § 169 Festsetzungsfrist) which means that now (April 2016) you can still submit it for 2015, 2014, 2013, 2012 years. This is extremely helpful if you’re moving to Germany — I hardly could have submitted any declaration after the first year of living here, that looked too complicated.
At some point I’ve heard that if you start submitting the declaration voluntarily one year you have to meet the strict deadline for the next year, but I couldn’t find any proof in the law easily, so I consider it to be false assumption or there is some tricky clause around that— consult a tax advisor if it’s important for you.
Good explanation of deadlines is provided on this web site (German).
How to submit the Einkommensteuererklärung?
There is one major choice you have to make, as you can prepare and submit the declaration:
- Using tax advisor services (Steurberater)
Personally I would recommend using Steurberater (tax advisor) only if you have some complicated cases (e.g. a lot of sources of additional income, necessity to pay taxes in US or other countries, entrepreneurship activities, etc) or if you don’t understand any German.
Tax advisor can cost you a lot (which would depend on your tax return, but can easily go up to 500–700 EUR or even higher) and in many cases it won’t be easier for you as you still need to prepare all the information, documents and invoices for them.
- On your own using special software or forms
There are free tax return forms in PDF, electronic forms and a lot of software products / web services for your convenience, software/web services mostly costs from 5 EUR to 25 EUR per submission of a simple declaration (e.g. if you’re an employee) which is significantly cheaper than using a tax advisor if you can handle submitting information in German as I couldn’t find any good software in English.
What software / forms can I use to submit Steuererklärung?
Let’s start with a couple of free options.
PDF forms published by tax services
It’s possible to download free PDF forms distributed by the tax services from their web site (here is one for Munich), but I find this way to be too complicated — forms are complex, don’t have many instructions (you need to google a lot to understand what’s going on there) and there are about 30 different forms published on the web site (depends on your case you need to fill out some of them in additional to the main one). This is how the form looks like:
Electronic Form (Elster Online)
Many documents can be submitted electronically to the German tax services, including tax return declaration. Statistics says that about 20 million electronic tax return declarations have been submitted to German tax services electronically in 2015 (either by Elster Online which is free service provided by tax services or by other providers using Elster’s API to submit the form on behalf of you electronically) and it’s growing.
In order to do it for free via tax services web site called Elster Online you’ll need to create an account with a special authorization code, pin code and special one-time registration code which you’ll receive by regular post to verify your physical address. When you’re done with the registration, you can fill out and submit the declaration online which is much more convenient than PDF:
Elster Online form is rather convenient and very powerful, but you’ll still need to google a lot to understand what’s going on as some of the explanations are hard to understand without special education or experience.
Special Software / Web Services
There are a lot of different software products and web services which can be used to prepare and submit your tax return declaration and considering the price between 5 EUR and 20 EUR (mostly) it seems to be a good investment into a well-explained, documented and effective declaration preparation.
Most of the programs will guide you through the form asking simple question in an interactive interview (e.g. how many workplaces did you have last year, how many kilometers are there from your home to the office, did you use apartment cleaning services, which insurances do you have, etc) and then calculate estimated tax return, verify the data and submit it electronically for you.
I’ve done a bit of research and I had a few requirements to the software or service I wanted to use:
- It should be web-based service (I use Mac and most of tax return software is Windows-only);
- It should be reasonably priced;
- It should keep data to be easily copied for the next year;
- It should be able to submit a copy electronically via Elster for faster processing;
- The product should be well-designed and pleasure to work with.
After some research I’ve chosen SmartSteuer web service (no, they don’t pay me for the advertisement, but if you want you can use my referral link to get some discount there and send me an Amazon Discount). Most of other programs were Windows-only or quite outdated, SmartSteuer on the contrary was extremely good and easy to use. Following my recommendations it has been used by a few other colleagues and friends without any difficulties and all of them liked it, so can’t recommend it enough! One declaration submission costs 15EUR (25EUR if you want to see results of the return in your interface afterwards for comparison).
Some other programs I’ve considered or heard about:
- Wiso Steuer Web (online!)
- Wiso Steuer Start
- Steuer Fuchs
- Aldi Steuerprogramm Einkommenssteuer
- Lidl Steuerspare
- and some others incl. iPhone/Android Apps.
You can have a look at the comparison web site too.
What taxes can I return and what documents do I need to prepare the declaration?
It really depends on your case, there are a lot of different causes for a tax return e.g. it can be expenses for professional activities which are not paid by your employer, additional insurances, traveling to work, personal mobile phone used for work, charity, and many many others.
You’ll definitely need to specify information from Lohnsteuerbescheinigung (arrives by post in the end of the year), Steuerbescheinigung from your bank (if you earn money on savings or securities), Steuerbescheinigung from your insurance company (especially if you have private health insurance), information about additional expenses incl. invoices, etc.
Overview of the process
- Prepare all the forms;
- Submit the forms electronically via the software or service you use;
- Print all the forms;
- Sign(!) the form;
- Print all the needed invoices/confirmations and include them in the package too;
- Send the package with a signed form and other documents to your Finanzamt in A4-sized envelope;
- Get reply in a few weeks/months;
It took me ~4 hours to prepare everything the first time and ~3 hours the 2nd year.
- First of all, submit your Einkommensteuererklärung, it’ll get you some extra money!
- Use SmartSteur (or some other good software or service), there is no need to pay to Steuerberater if you don’t have a good reason to (but please do hire them if your case is complicated). Using special software/service will save you a lot of time (and thus money) in comparison with PDF/simple forms.
- In general case German courses can’t be submitted for tax return (source) which is quite a popular questions among professionals working in Germany.
- Don’t submit all the small expenses — Pauschalbetrag (minimal amount) is designed exactly for that. Submitting all the small expenses will not get you much bigger return in most cases.
- On the contrary — submit all big items for return (e.g. apartment cleaning or house repairing services) as it might significantly increase the amount you’ll get.
SteuerTipps — a lot of good information (German)
Steuern.de — and more information (German)
Some news on 2015 Steuererklärung (German)
Paying Taxes in Germany (incl. list of English-speaking tax advisors)