Income Tax Rebates in Germany
This tax guide looks at income tax rebates and discusses the process involved and considerations for completing a tax rebat claim.
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- Business expenses (Werbungskosten)
- Extraordinary expenses (Außergewöhnliche Belastungen)
Tax Return (Einkommensteuererklärung)
Tax returns timelines are aligned to the financial year which in Germany runs from January to December. The tax return is filed after January of next year.
How much refund are you entitled to?
The chances of getting a refund depend on certain factors.
As explained in the German Income tax system, you have the possibility of receiving a refund in the following situations if,
- There are Business expenses (Werbungskosten) more than 1000 Euro per year
- You have worked a few months in Germany and the rest of the year in other countries where your income is low (Global Income)
- You have provided financial support to your needy dependents (Parents/spouse/child etc.) and hence eligible for deduction (Unterhalt)
- You have changed your tax class during the year because you got married. (Tax class change)
- You have paid rent in Germany and your country of origin (Double Household)
- You have children and your income is above EUR 60000 per year and would therefore benefit more by the Kinderfreibetrag than the monthly Kindergeld (Kinderfreibetrag). - Note: Kindergeld must be applied in any case. The Tax office will pay benefit above Kindergeld. Kindegeld will not be paid by Tax office.
- You have children and there are expenses for education, Kindergarten etc.
How long does it take to get a refund?
It is possible to get pension contributions but this it a separate process and it can be refunded after two years of leaving Germany.
Last date for filing tax return
If you are entitled to get a refund from the tax office, then you can apply for return as long as it is filed within the next 4 years. So in the current Year 2024, it is possible to apply tax return of year 2020, 2021, 2022 and 2023.
However, if the taxpayer is supposed to pay taxes then they should be filing a tax return before 31st May of the next year.
Below are few situations where there is an obligation to file a tax return before the tax deadline
- The tax office (Finanzamt) has given a free allowance on the tax card
- Married couples when both of them are employed and have opted for tax classes 3 and 5 in the tax cards
- Received tax-free benefits e.g. Mutterschaftsgeld, Elterngeld, Paid sick leave etc.
- They have more than one job/employment at the same time
- Taxpayers who have income outside of Germany in the financial year (So in the year of relocating to/from Germany)
- Freelancers and self employed
- The tax office has sent you a reminder letter stating the deadline to file your tax return, even if none of the above is applicable to you.
Tax saving ways Explained
Business expenses (Werbungskosten) provide a good means or legally reducing your tax bill yet many forget or simply decide not to claim for the business expenses.
Below is a list that shows where some tax rebates can be claimed,
- Expenses for traveling from home to office
- Relocation expenses (e.g. you moved from your country of origin to Germany or within Germany)
- Cost for professional development i.e. professional books, training, language course etc.
- Expenses for professional equipment e.g. Laptop, desktop etc.
- Double household (If you have primary household where your family (wife and children) are staying
- Flight tickets cost home country to meet family (spouse & children)
- Telephone calls
- House Rent paid in Germany
- Food expenses for first 3 months of arrival to Germany. (Proof not required)
There are many more avenues, which are mostly applicable for consultants and other working class, but for practical purposes not listed here
Required documents/information for filing tax return
- Lohnsteuerbescheinigung (This is your annual income statement from employment; you can get this from your employer.
- Identifikationsnummer (11 digit unique number) and name your Finanzamt. ("Bescheinigung für der lohnsteuerabzug" has these details)
- Steuernummer (If you have filed your German tax return previous year, you can find it on your assessment order (SteuerBescheid) from finanzamt.)
- Bank account details: German bank account details for refund purposes (Konto-Nr, BLZ, IBAN, BIC) OR resident account details if you don't have German account.
- Proof of income outside Germany
- If you worked outside Germany for a few months between January and December, then Salary slips of that employment. e.g. you worked June to December in Germany, then salary slips from January to May showing where you worked are also required. This is used to determine your tax slab. This income is not taxed twice.
- Business Expenses for official purpose. For employment related expenses.
- Double Household, if applicable:
- Proof of house in home country (e.g. house rental agreement, home loan account statement, Sale deed etc.)
- Flight tickets and Boarding passes for which you have paid out for
- German Rent agreement / Rent receipts / Bank statement showing payment of rent
- Brokerage fee
- KinderGeld details, if applicable
- Name of child(ren), Date of birth
- Amount and Period for which KinderGeld is received or not received. If kindergeld was rejected, then rejection letter is required.
- Education, Kindergarten expenses
- Dependent support, if applicable (If your Parents/spouse/child are dependent on you in your country of origin and you sent money to them)
- Proof of transfer (Your own German bank account statement with debit and your dependent's account statement to explain their income source, expenses and financial need)
- Completed form called Unterhaltserklärung for each dependent (given below in attachment), and supporting documents. This form has to be certified by Notary and signed by dependent person.
- Any other income e.g. Elterngeld, Mutterschaftsgeld etc.
Use the appropriate year as applicable.
- Install and fill up the relevant forms
- See the automatically calculated tax refund
- Preview your tax return file before submission
- Submit online to Finanzamt (without digital signature)
- Take printout of submitted tax return, Sign and attach necessary proofs in correct order
- Submit the complete file by post or personally to Finanzamt (Tax office)
You can expect a refund within 8-12 weeks