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Who is obliged to file a tax return in Germany and who isn’t?

Now that the deadline for people in Germany to file their taxes is fast approaching, have you thought about whether or not it's mandatory for you to do so?

Who is obliged to file a tax return in Germany and who isn’t?
An instructor processing a tax return with a trainee. Photo: Markus Scholz/dpa-tmn

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People who live and work in Germany in certain circumstances are not obligated to file a tax return by May 31st.

Earners below a certain income level

If you earn below €8,820 per year as a single person or €17,640 annually together with your civil partner, you do not have to pay taxes on this income (i.e. file a tax return).

Employees in tax class 1

Employees in tax class 1 (Steuerklasse 1) whose only source of income is from their employer – a significant amount of the workers across Germany – also do not have to file a tax return.

The same applies to married people with tax class combination 4/4 (Steuerklassenkombination 4/4). In both these cases, filing one’s taxes is unnecessary since one’s employer pays the workers' taxes to the finance office.

But it could be worth filing a return nonetheless.

For the 11.5 million residents nationwide who received a tax refund in 2013, the Federal Statistics Office (Destatis) reported last year that the average refund was €935 per taxpayer. German tax association VLH recommends filing a tax return even if you're not obligated to do so.

Besides, if you submit your tax return voluntarily, you are not bound by the usual deadline – meaning that you can file your tax return retroactively for up to four years. 

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On the other hand, many working residents in Germany are obligated to declare their taxes as regulated in Germany’s Income Tax Law.

If you identify with any of the following categories and instances, it's probable that you have to submit those pesky forms to the finance office.

Employers

Say you have worked for more than one employer in the same year. If your new employer hasn’t taken the figures from your previous employer into account when calculating your income tax, filing a return is necessary. If this is this case, you may see the capital letter “S” in line 2 on your income tax statement (Lohnsteuerbescheinigung).

Moreover, you must file your taxes if you are in tax class 6 – which is the case when you have two employers at the same time.

You also have to file if you have received “other benefits” from a new employer (e.g. vacation pay) and your current employer does not have your previous employer's income tax statement for the same calendar year.

Photo: DPA

Marriages

Married couple who have similar income levels normally pick tax class 4, meaning they don't have to file a return.

But if one of the couple earns considerably more than their spouse, it is often advantageous to pick either tax class 3/5 or 4 “mit Faktor” (with factor). If one does this one is obliged to file a tax return. Since 2010, tax class 4 with factor has been an option for those hoping to have a more accurate distribution of their income tax deductions based on their income.

The same applies if you or your spouse have applied for an individual tax assessment.

Marriage certainly seems to be the trickiest factor in knowing whether to file a return. If you have chosen to have your income assessed individually rather than as a couple, you need to file a return. This also applies if you do not want to equally split the training allowance (Ausbildungsfreibetrags) or the disability allowance (Behindertenpauschbetrags) for your child.

If you are an employee and divorced your partner last year but your ex-partner remarried in the same year, you also have to submit a tax return as the finance office needs to know who’s being assessed with whom. This also applies if the marriage was dissolved by the death of a spouse.

On the other hand, if you are not married to your child's parent and want to transfer certain allowances for one child or divide them equally, in certain instances both parents must submit a tax return – so that, for instance, apprenticeship tax allowances are only granted once.

Another example of when you might have to submit a tax return is if your spouse has limited tax liability and lives in another European Union country.

Wage compensation benefits

If you have received more than €410 per year in wage compensation benefits – such as benefits having to do with unemployment, illness, short-term work or parental leave – you must file a tax return even though these benefits are tax-free in Germany.

Additional income

If you have additional income, for instance income you collect from renting out your flat or from self-employment, it goes without saying that this needs to be declared in your tax return – particularly if this is over the sum of €410.

Loss carried forward from previous years

You must moreover complete the tax forms if you have tax balances from previous years which have not yet been settled. This minus will then be offset against your taxable income.

Self-employed people and business owners

If you run your own business or are self-employed (e.g. a freelancer), unlike workers employed by a company, your income tax is not deducted from your pay cheque each month – meaning you need to file it yourself.

If the tax office requests it  

If you receive a letter from the tax office and are asked to file your tax return for whatever reason, you must of course comply with this request.

Take a close look at the Income Tax Law if none of the aforementioned points describes your situation and you're unsure whether or not to file a tax return at all. Otherwise inquiring with a tax consultant could be handy.

FOR MEMBERS: Everything to know about becoming a freelancer in Germany

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MONEY

EXPLAINED: 10 ways to save money on your groceries in Germany

With inflation at its highest level in 70 years, consumers in Germany are really feeling the pinch, particularly in the supermarket. Here are some simple tips on how you can save money on your grocery shopping.

EXPLAINED: 10 ways to save money on your groceries in Germany

1. Buy seasonal products

Fruit and vegetables are less expensive when they are in season in Germany, as they don’t have to be kept in cold storage which – thanks to high energy prices – incurs high costs which are passed onto the customer. So going for produce that is naturally abundant at the time of year can really pay off. 

At the moment, vegetables such as kale, squashes, leaks and cabbages are currently in season, but you can refer to an online Saisonkalendar (season calendar), such as this one, to keep an eye on which fruits and veggies are in season at different times of the year.

Regional organic vegetables on sale in Brandenburg. Photo: picture alliance/dpa/dpa-Zentralbild | Bernd Settnik

2. Go easy on butter 

The price of butter in Germany has increased by over 40 percent in the last year – in some cases, a 250-gram packet of butter now costs €3. 

READ ALSO: Energy crisis: Which everyday German products are increasing the most in price?

As a substitute for butter in cooking, go for vegetable oils such as olive oil, linseed or soybean oil or certain types of margarine and, for spreadable treats, consider alternatives such as quark or cheese spreads. 

3. Have a meal plan and a shopping list

One golden rule for saving money in the supermarket – wherever you live – is to plan your meals and write down the ingredients in a list. Having a shopping list often helps avoid expensive spontaneous purchases and helps you to really only buy the things you will definitely use.

A woman writes a shopping list. Photo: picture alliance/dpa/dpa-tmn | Christin Klose

4. Buy less meat

The prices of meat products, such as sausages and fish have also risen by 19.3 percent since last October. As a result, German consumer advocate groups advise shoppers to replace some of their meat products with plant-based foods, pulses or legumes instead, such as lentils, peas, beans, chickpeas, and soybeans.

READ ALSO: Thousands protest in Berlin over price rises

5. Visit markets

Consumer advice groups also advise shoppers in Germany to visit their local fruit and vegetable markets, as fresh produce can often go for a lot cheaper than in the supermarkets.

6. Compare prices by weight 

Another good tip for buying groceries on the cheap is to compare prices by weight, not simply by the retail price on display. In addition to the retail price, you will usually see how much 100 grams of each product costs and you should use this number as a basis for comparison.

A customer stands at the scales for fruit and vegetables in the Eisenstein village store in Bavaria. Photo: picture alliance/dpa | Armin Weigel

For example, if you want to buy Parmesan cheese and there are two different varieties marked at €4 and €6, the €4 package may seem cheaper. But if you then look at the price by weight, you may find that the €6 Parmesan comes to €1 per 100 grams, while the €4 package comes to €2 per 100 grams.

7. Use apps to find deals 

The price for the same product can sometimes vary greatly between supermarkets in Germany, so it can pay to shop around.

But, if you don’t have time to go from store to store hunting down the cheapest products, there are several apps – including Smhaggle, Marktguru and KaufDA – available which you can use to find and compare deals in local supermarkets. 

Another great app for those looking to make serious savings on their foodstuffs is Too Good to Go – an app which connects people to local restaurants, bakeries and food shops which are looking to get rid of surplus food. 

8. Get an advantage card

With an advantage card such as the Payback Card or DeutschlandCard, you can collect points every time you shop in a variety of stores, and then ultimately transform these points into monetary discounts. 

A customer uses their Payback app at the supermarket checkout. Photo: picture alliance/dpa/PAYBACK GmbH | PAYBACK GmbH

These cards are free to get and just require registration. Using them regularly, along with extra point-collecting coupons, can amount to quite a savings. 

9. Check out the bottom shelf

The bottom shelves in German supermarkets are often where you will find the most economically-priced products, including the supermarkets’ own-brand products. If you reach for the private labels “Rewe”, “Ja”, “Gut & Günstig”, “Edeka”, “Penny”, “Grandessa” or “Maribel”, you can get almost the identical product as the branded variety for half the price. 

10. Shopping just before closing time

If you shop just before closing time, you can often find great deals in German supermarkets – especially at the vegetable, fruit, meat and yoghurt counters. 

READ ALSO: KEY POINTS: Germany’s inflation relief measures to support people in cost of living crisis

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