How to File Individual Tax Return in Germany

Filing an individual tax return in Germany is a crucial process for anyone earning income, especially if you’re unfamiliar with the country’s tax system. Whether you’re a resident, expatriate, or foreign national working in Germany, understanding how to file an individual tax return (Einkommensteuererklärung) is essential to staying compliant and potentially receiving a tax refund.

This guide will walk you through the entire process, including how to use ELSTER, the official online platform for filing taxes in Germany. By the end of this blog, you’ll have all the knowledge you need to complete your tax return with confidence and avoid any penalties or late fees.

What Is an Individual Tax Return in Germany?

An individual tax return in Germany, known as the Einkommensteuererklärung, is a formal declaration of a person’s income, deductions, and other financial details submitted to the German tax office, known as the Finanzamt. The information in the return determines how much tax you owe or whether you’ll receive a refund.

Germany’s tax system is progressive, meaning that tax rates increase as income rises. Filing an individual tax return allows taxpayers to report all their sources of income, apply for deductions, and ensure they’re taxed at the correct rate.

Who Needs to File an Individual Tax Return in Germany?

While not everyone in Germany is required to file a tax return, certain circumstances necessitate it. You must file an individual tax return if:

• You are self-employed or a freelancer.
• You receive income from multiple sources, such as from various employers or investments.
• You have foreign income that needs to be reported.
• You’re claiming specific deductions or allowances that require a tax return.
• You receive more than a basic income and expect to pay additional tax beyond what is deducted through your salary.

If you do not fall into any of these categories, you may not be required to file a tax return, but many people voluntarily file to claim refunds for things like work-related expenses, charitable donations, or other qualifying deductions.

Using ELSTER: Germany’s Official Tax Filing Platform

ELSTER, short for Elektronische Steuererklärung, is Germany’s online platform for submitting tax returns. It’s the official, secure method of filing and communicating with the tax office. ELSTER allows taxpayers to file their tax returns electronically, which is both faster and more convenient than traditional paper filings.

Benefits of Using ELSTER

• Simplicity and Convenience: ELSTER allows you to submit your tax return from the comfort of your home, without needing to visit the tax office.
• Secure Filing: The platform is secure and encrypted, ensuring your personal information remains private.
• Pre-filled Data: ELSTER automatically pre-fills certain data from previous tax filings, saving you time and reducing the risk of errors.
• Tracking and Confirmation: ELSTER provides real-time status updates and confirmations, so you know when your return has been successfully filed.

How to Use ELSTER

1. Create an Account: Go to de and create an account by entering your personal details and tax ID number (Steueridentifikationsnummer).
2. Secure Activation: Once registered, you will receive an activation code in the mail. Use this code to activate your account and set up a password.
3. Start Your Tax Return: Log in to your ELSTER account and begin filling out your tax return. You can save your progress and return to it later.
4. Submit Your Tax Return: Once you’ve completed all the necessary fields, submit your tax return electronically. ELSTER will provide confirmation that your return has been successfully filed.

Documents You’ll Need to File an Individual Tax Return

Before starting the filing process, make sure you have all the required documents at hand. These documents support your claim and help you file accurately:

• Tax Identification Number (Steueridentifikationsnummer): This number is unique to you and is essential for filing.
• Annual Payslip or Income Statement (Lohnsteuerbescheinigung): Employers issue this document to report the salary and taxes paid during the year.
• Bank Statements: If you have investment income (interest, dividends, etc.), you’ll need your bank statements.
• Proof of Health Insurance: This includes documents that show what type of health insurance coverage you have, which may be deductible.
• Receipts and Invoices: For any tax-deductible expenses, such as job-related costs, business expenses, or donations.
• Rental Agreements: If you are claiming housing-related deductions, you will need proof of your rental agreements or utility bills.
• Foreign Income Statements: If you earn income from abroad, these documents will be necessary to report foreign earnings.

Having all these documents ready will speed up the filing process and ensure you don’t miss out on any deductions or credits.

Step-by-Step Guide: How to File an Individual Tax Return in Germany

Step 1: Log in to ELSTER

If you haven’t already done so, create an ELSTER account and log in to begin your filing process. If you already have an account, simply enter your login details.

Step 2: Select the Correct Tax Form

The most common form for individual tax returns in Germany is the ESt 1 V form (Einkommensteuererklärung), which is for individuals with regular income sources. If you have additional income from freelance work, investments, or other sources, you may need additional forms, such as:

• Anlage N: For employment income.
• Anlage KAP: For investment income.
• Anlage SO: For other income, like pensions or alimony.

Step 3: Input Your Personal Information

Start by entering your basic information into the form. This includes your name, address, tax identification number, marital status, and number of children (if applicable). Make sure this information is accurate to avoid any delays in processing.

Step 4: Report Your Income

In this section, you’ll provide details about all your sources of income. For employed individuals, this will include your salary, as reported in your Lohnsteuerbescheinigung (income statement). If you are self-employed, you will report income from your business or freelance work. Additionally, if you have any investment income, rental income, or foreign earnings, you’ll need to include these as well.

Step 5: Claim Deductions and Allowances

Germany offers several tax deductions that can reduce your taxable income. These include:

• Commuting Costs: If you drive to work or use public transportation, you may be eligible for deductions related to your commute.
• Work-Related Expenses: You can deduct certain work-related expenses such as supplies, business travel, and professional development courses.
• Health Insurance Contributions: Contributions to health insurance (both private and public) are deductible.
• Childcare Costs: If you incur expenses for childcare, these may be deductible as well.
• Donations: Donations to registered charities are tax-deductible.

Make sure to gather all receipts and documents to support your claims.

Step 6: Review and Submit Your Tax Return

Once you’ve completed the form, carefully review all information to ensure it’s correct. ELSTER offers a built-in validation tool that checks for common mistakes. After ensuring that all information is accurate, submit your tax return. ELSTER will provide a confirmation that your submission has been received.

Filing Deadlines and Penalties

The standard deadline for filing an individual tax return in Germany is July 31 of the year following the tax year. If you are working with a tax advisor, the deadline is extended to February 28 of the subsequent year.

Failure to file by the deadline may result in penalties, including:

• Late Filing Fees: You will incur additional charges for filing after the deadline.
• Interest on Unpaid Taxes: If you owe taxes and fail to pay on time, interest will be charged.
• Formal Warnings: The tax office may send a warning if you fail to file within a reasonable period.

What Happens After You Submit Your Tax Return?

After submitting your return via ELSTER, the Finanzamt (tax office) will process your return and issue a tax assessment (Steuerbescheid). This document will outline:

• The total tax you owe or the refund you are entitled to.
• A breakdown of the income and deductions accepted by the tax office.

It may take several weeks or even months to receive your tax assessment. Once received, make sure to carefully review it for any discrepancies. If you disagree with the assessment, you can file an appeal.

How Ease to Compliance Can Help with Filing Your Individual Tax Return in Germany

At Ease to Compliance, we help individuals navigate the complexities of filing their tax returns in Germany. Our expert team ensures that your tax return is filed accurately and on time. Here’s how we assist:

• Guidance and Support: We provide clear instructions and help you gather the necessary documents.
• ELSTER Filing: We assist with setting up your ELSTER account, filling out the forms, and submitting the return.
• Maximizing Deductions: Our firm ensures that you don’t miss out on eligible deductions and credits.
• Timely Submission: We make sure your tax return is filed on time to avoid penalties.

If you’re unsure about how to proceed or need assistance filing your tax return than Contact us. We are here to help.

FAQs On individual tax return in Germany