Filing Taxes in Germany for the First Time: An Expat's Simple Guide

Welcome to Germany! You’ve navigated the bureaucracy, found a flat, and are finally enjoying the bratwurst and biergärten. But as the new year approaches, a new challenge looms: the German tax return, or Steuererklärung.

The German tax system can seem intimidating, especially with its long words and complex rules. But don’t worry. For most expats, the process is more straightforward than you think. This guide will break down the essentials of filing your taxes for the first time.

Do I Even Need to File a Tax Return?

This is the most important first question. In Germany, filing a tax return can be either mandatory (Pflichtveranlagung) or voluntary (Antragsveranlagung).

You are required to file a tax return if any of the following apply to you:

You are self-employed or a freelancer (selbstständig).
You received more than €410 in untaxed additional income, such as rental income or certain social benefits like unemployment benefits (Arbeitslosengeld I).
You and your spouse are taxed jointly under tax classes III/V or IV/IV with a factor.
You had income from more than one employer during the year.
You received a severance payment (Abfindung).
The tax office (Finanzamt) has explicitly asked you to file.

If you are a standard, single employee (Tax Class I) with one employer and no other significant income, you are likely not required to file.

So why would you file if you don’t have to? Because it’s highly likely you’ll get money back! The average tax refund in Germany is over €1,000. It’s almost always worth doing.

Key Terms You Need to Know

Before you start, let’s decode some essential German tax terms:

Steueridentifikationsnummer (Steuer-ID): Your unique, permanent Tax Identification Number. You receive this by mail shortly after registering your address (Anmeldung). You need it for everything tax-related.
Finanzamt: The local tax office responsible for your district.
Lohnsteuerbescheinigung: An annual summary of your earnings and the taxes your employer has already paid on your behalf. You’ll receive this from your employer automatically after the end of the tax year (usually by February).
Steuerklasse: Your tax class, which determines the rate of income tax withheld from your salary. It’s based on your marital status. For example, Class I is for single individuals, and Classes III and V are for married couples where one earns significantly more than the other.
Werbungskosten: Work-related expenses. This is the magic category where you can claim deductions to reduce your taxable income.

How to File: Your Three Main Options

The Official Way: ELSTERELSTER (Elektronische Steuererklärung) is the official online portal from the German tax authorities.
- Pros: It’s free and completely official.
- Cons: It’s entirely in German, user-unfriendly, and assumes a high degree of knowledge about the tax system. Not recommended for beginners.
The Expat-Friendly Way: Third-Party Tax SoftwareThis is the most popular and recommended method for expats. Several online companies have created user-friendly, English-language platforms that guide you through your tax return with simple questions.
- Popular Options: Taxfix, Wundertax, SteuerGo.
- Pros: Available in English, designed for simplicity, maximizes your refund by asking for common deductions, and you only pay a flat fee upon submission.
- Cons: There is a small fee (typically €30-€60).
The Professional Way: A Tax Advisor (Steuerberater)If your financial situation is complex (e.g., you’re a high-earning freelancer, have significant foreign investments, or own property), hiring a tax advisor is the safest bet.
- Pros: They handle everything, optimize your return for the maximum refund, and can communicate with the Finanzamt on your behalf.
- Cons: This is the most expensive option, with fees often running into several hundred euros or more, depending on the complexity.

Important Deadlines to Remember

For Mandatory Filings: The deadline is July 31st of the following year. (e.g., for your 2024 taxes, the deadline is July 31, 2025).
For Voluntary Filings: You have four years to file your return. (e.g., you have until December 31, 2025, to file your voluntary return for the 2021 tax year). This is great news if you didn’t know you could get a refund for previous years!

If you use a certified tax advisor (Steuerberater), the deadline is automatically extended to the end of February of the year after that.

Common Deductions for Expats

The key to a good refund is knowing what you can deduct. Here are some of the most common deductible expenses (Werbungskosten) for expats:

Relocation Costs: Did you move to Germany for your job? You can deduct the costs of flights, shipping your belongings, and temporary accommodation.
Work-From-Home Allowance (Homeofficepauschale): You can claim a set amount for each day you worked primarily from home.
Commuting Costs (Pendlerpauschale): You can claim a flat rate of €0.30 per kilometer for your one-way journey to work (this increases to €0.38 from the 21st kilometer).
Work-Related Equipment: Laptops, office chairs, software, or tools you bought for your job.
Professional Development: Costs for courses, certifications, or even German language classes if required for your job.
Dual Household Costs (doppelte Haushaltsführung): If you maintain a primary residence in your home country while renting a second apartment in Germany for work.

Filing your German tax return for the first time might seem daunting, but it’s a manageable process. By understanding whether you need to file, choosing the right method, and gathering your documents, you can turn a task you dread into a rewarding annual routine. For most expats, an English-language tax software is the perfect middle ground, making the process simple and ensuring you get back the money you’re owed.

Disclaimer: This article is for informational purposes only and does not constitute legal or tax advice. Please consult with a certified tax professional for advice tailored to your individual situation.

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