For members


Everything you need to know about your German tax return in 2022

There have been a huge number of changes to German tax law recently, which could see some taxpayers netting an even bigger rebate this year. Here are the key things you need to know about filing your tax return for 2021.

Tax return 2021
A worker does their German tax return at home. Photo: picture alliance/dpa/BCD Travel | BCD Travel Germany GmbH

Filling in a tax return is never a fun experience, but statistics from the German government show that it can definitely be worthwhile. In 2017, the average worker received a €1,051 rebate after submitting their tax return, according to the Federal Office of Statistics. Not only that, but 90 percent of workers got at least some money back from the tax office.

If you’re planning on filling in your tax return yourself this year without the help of a tax advisor – and you have to submit one because you’re a freelancer or self-employed – the deadline for doing so is July 31st, 2022.

Remember that if you’re filling in a tax return voluntarily you can generally do so up to four years after the year in question. But keep in mind that if you have been part of the Kurzarbeit reduced working hours scheme, then you will have to submit a tax return this year (more on this below).

Here’s what you need to know about the most important tax allowances and write-offs you may be entitled to.

Increased commuter allowance

Since January 1st, 2021, the so-called commuter allowance has been increased by five cents. The commuter allowance enables workers to write off expenses for every kilometre they have to travel to work, with the amount increasing in commutes of more than 20km one-way. 

For the first 20km, commuters can claim 30 cents in expenses, and from the 21st kilometre onwards, commuters can claim 35 cents per kilometre. So a person who travels 25km to work would be able to claim €7.75 in travel expenses for each working day. 

The amount taxpayers can claim for commutes over 20km is set to go up again this year in light of rising fuel costs. Workers will soon be able to claim 38 cents back on each kilometre over 20 that they travel to work, but this will only apply to the 2022 tax return, so the benefits won’t be felt until 2023. 

READ ALSO: EXPLAINED: What Germany’s relief package against rising prices means for you

Workers on Kurzarbeit must submit a tax return

The Kurzarbeit scheme, which allowed workers to receive similar pay for reduced hours during Covid, remains an important issue for many who now have to file their tax returns. The basic rule is that anyone who received more than €410 via the scheme in 2021 is obliged to file an income tax return this year. Incidentally, this applies to all of the so-called “wage replacement benefits”, i.e. also to sickness, maternity, parental, unemployment or insolvency benefits.

“Even those who are not very good at tax returns should take the compulsory assessment very seriously,” says Bernd Werner, chairman of Lohnsteuerhilfe für Arbeitnehmer, a tax advice agency based in Gladbeck.

This is because experts believe that the tax office is likely to review all cases and could ask people who have neglected the 2021 tax return to fill one in several months later. These unlucky people will then have to pay €25 per month in late fees and will possibly face interest on their tax repayments as well. 

Whether Kurzarbeit employees are due a tax rebate is subject to a number of factors. While the Kurzarbeit allowance itself isn’t subject to tax, it will be counted as income for the purposes of determining which tax rate is applicable.

READ ALSO: Why millions more German workers have to do a tax return this year

Tax relief for people with disabilities

On January 1st, 2021, the government hiked up the financial allowance granted to people with disabilities. The amounts – which had remained unchanged since 1975 – were doubled. Since last year, for the first time, people with a “degree of disability” (GdB) of 20 can claim a lump sum of €384, with the allowance increasing with each additional degree of disability. People with a degree of disability of 100, for example, can claim €2,800. For a full list of the relevant amount for each disability grade and for blind people, check out these helpful charts.

If you received the lump sum in 2020 or before that, you don’t have to do anything more this year as the tax authorities will automatically apply the increases. However, numerous glitches surfaced at the beginning of last year, so do double-check whether the tax authorities have granted the correct lump sum.

Walking frame with wheels

A walking frame with wheels stands outside the door of a GP’s office. Photo: picture alliance/dpa | Angelika Warmuth

If you were first diagnosed with a disability in 2021, you’ll need to apply for the financial aid at your local tax office before you can receive the money.

It’s important to note that if medical expenses have been incurred due to the disability, they can still be deducted from the tax return. In addition, lump-sum travel allowances have been introduced for people with disabilities:

  • €900 is given to people with a GdB of at least 80 or with a GdB of at least 70 and severe mobility issues
  • €4,500 for people with a severely disabled person’s ID card or those who are classed as blind (Bl), deaf-blind (TBl) or helpless (H)

As of 2021, the legislator also raised the flat-rate care allowances significantly. Carers who work for free can now claim:

  • €600 for care level 2,
  • €1,100 for care level 3
  • €1,800 for care degree 4, 5 or helplessness (sign “H”).

Changes to child benefit

In an important change for families, child benefit and child allowances were increased in 2021. 

The monthly child benefit for last year is: 

  • €219 each for the first and second child
  • €225 for the third child
  • €250 each for the fourth child and above. 

At the same time, the child allowance has also increased. This is now €8,388 for each child if the parents are assessed together.

The tax office calculates which is more advantageous for the taxpayer – child benefit or child allowance – with the “Günstigerprüfung”.

In addition, there was a one-time Kinderbonus of €150 for each child in 2021 due to the Covid pandemic. In 2022, an additional Kinderbonus of €100 per child is to follow, but this won’t apply until 2023. 

Children and families at a playground in Berlin.

Children and families at a playground in Berlin. Photo: picture alliance/dpa | Dorothée Barth

Relief for single parents

An increased amount of tax relief for single parents with one child of €4,008 also applied in 2021. This had been raised because of Covid, but the government has decided to keep the higher amount on a permanent basis. For each additional child, the relief increases by €240, as before.

Simplified proof of donations

Due to the catastrophic flooding in July 2021, some federal states – including Saxony, Bavaria and North Rhine-Westphalia – have decided to simplify the proof of donations, which are also a tax write-off. The prerequisite is that donors transferred money to one of the donation accounts that was eligible for tax relief.

Generally, states have increased the maximum amount of donations for which the simplified proof of donation (e.g. the remittance slip) is accepted. Now, you can use simplified proof for donations of up to €300.

Home office allowance

With so many people continuing to work from home throughout the pandemic, the home-office allowance of €5 per day will also apply to the 2021 tax return.

“The home office allowance sounded good on paper,” says Werner. “However, it didn’t pay off for many home workers who could certainly have used the money.”

That’s because the deductible amount is based on the number of days an employee works from home and is capped at €600. However, since the tax office already assumes expenses of around €1,000 per employee, workers will have to have at least €400 in other expenses to benefit from it. This may not be too hard to find, however – especially if you bought equipment like a printer or laptop to use for work last year, or paid for training related to your profession. 

A man works from home in Berlin.

A man works from home in Berlin. Photo: picture alliance/dpa | Annette Riedl

Home office workers should also be aware that they cannot claim a commuter allowance on home office days.

According to Lohnsteuerhilfe für Arbeitnehmer, another way to get tax relief from working from home is to have a dedicated working room in the flat. This allows you to deduct part of your rent and expenses for furniture and equipment from your return. However, the conditions for this are very strict: you must be able to prove your flat is big enough to support a separate office and that this room is solely used for work purposes. 


Income-related expenses

As we mentioned above, even people working at their kitchen table or in the living room (or, dare we say it, in bed) can write off income-related expenses in their tax return.

These include, for example, purchases such as a PC or a printer, a camera for video conferences, but also furniture such as an office chair or desk. There are a few things to be aware of, however: purchases such as a PC must be at least partly used for work and only the amount used for work can be deducted from the tax return. That means, for example, that a €2,000 laptop that is used for work 50 percent of the time equates to a €1,000 deduction in your tax return. 

Equipment costs of up to €800 (excluding VAT) can be deducted immediately, while more expensive purchases must be “depreciated” over several years. For example, a pricey work phone costing €1,000 could equate to four lots of €250 deductions over four years. Computers and software are exceptions: since 2021, these can be written off immediately regardless of what they cost.

Another important thing to note is that working from home allows you to deduct slightly more for your phone and internet service. Currently, a flat-rate of 20 percent of your monthly internet and phone costs can be treated as income-related expenses.

READ ALSO: The tax terms that every expat in Germany needs to know

Tips for pensioners

If a pension was paid for the first time in 2021, 81 percent of the pension is counted as taxable income. Even a monthly pension of €1,250 may mean that tax has to be paid. Furthermore, the tax authorities ask pensioners who have not yet submitted a tax return to fill in backdated ones stretching back several years. In individual cases, this may even result in back-payments of several thousand euros as well as considerable late fees, according to Lohnsteuerhilfe für Arbeitnehmer.

Seek advice and double-check your return

As a final word of advice, Lohnsteuerhilfe für Arbeitnehmer suggests speaking to a tax support association and being extra thorough when reviewing income and potential expenses. 

“It’s also worth seeking good advice from an income tax assistance association,” says Werner. “Furthermore, we advise everyone to check their tax assessments carefully, because many tax assessments are incorrect. This is shown every year by the number of rejected returns listed by the Federal Ministry of Finance.”

READ ALSO: Five simple steps to getting your German tax refund

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For members


What to know about cryptocurrency in Germany

Germany has been dubbed the most crypto-friendly country in the world. We break down why that is, and what you should know about cryptocurrency in Germany.

What to know about cryptocurrency in Germany

As with all of our financial and tax summaries, this is a guide on regulations only. For financial advice which is personalised to your situation, please contact an accountant or other specialist. Please note also that EU financial regulators have warned that many crypto-assets are highly risky and speculative. Find out more information here.

At first glance, Germany seems an odd place to be a cryptocurrency haven. Only 17 percent of people in Germany invest – way behind the percentages seen in other countries – which may go some way towards justifying the country’s reputation as a land of risk-averse savers.

Cryptocurrency, often called crypto for short, is considered by many investment analysts to be one of the riskiest and most volatile investments a person can own.

Concerns have also been raised over the environmental impact of cryptocurrencies.

There are countless types of crypto on the market these days. What each one has in common is that it is digital and secured using cryptography, meaning they can’t be counterfeited. 

Even the three biggest and most well-known cryptocurrencies – Bitcoin, Ethereum, and Ripple – are prone to huge sudden spikes and falls in value. It’s also a market that has seen some, like the LUNA cryptocurrency last month, crash completely.

Yet, bucking national stereotypes, Germany has some of the most favourable laws in the world for investing in these high-risk assets.

READ ALSO: What you should know about investing in Germany

Germany’s crypto tax advantages

Crypto exchange comparison site Coincub recently named Germany as the world’s most crypto-friendly country, with Singapore and the United States rounding out the top three.

A big reason for this comes down to favourable tax laws. Normally, when someone in Germany sells a regular stock or ETF asset at a higher price than they bought it for, their brokerage will automatically withhold 25 percent of their gain in tax.

Euro notes bitcoin coins

Euro notes and bitcoin coins on a laptop. Photo: picture alliance/dpa/dpa-tmn | Christin Klose

But following tax guidance issued by the Federal Ministry of Finance last month, certain gains in cryptocurrency could face absolutely no taxation at all.

Firstly, the ministry has affirmed that any profit of less than €600 faces no tax. More significantly though, cryptocurrency that someone in Germany has held for at least a year faces no tax at all – no matter how big the gain is when that person sells it.

Why is the law so favourable in Germany?

One variable is political. The liberal Free Democrats tend to attract a sizeable number of votes from the very demographics more likely to hold crypto. While the FDP is in a three-way coalition with the progressive Social Democrats (SPD) and the Greens, FDP leader Christian Lindner currently holds the German Finance Ministry.

During the 2021 election campaign, Lindner made regulating and attracting crypto investment a big part of the FDP platform and coalition negotiations.

“I think the German government understands how to make money better than a lot of other countries,” says the man behind crypto Youtuber The Modern Investor, a channel with over 225,000 subscribers.

“A lot of people in the crypto space are very internationally mobile,” he tells The Local. “If they choose to live in Germany for the favourable investing conditions, they’re going to be spending money in German supermarkets and buying German services. The money the government misses out on in taxes tends to go right back in the system.”

“If cryptocurrencies continue to take off globally, Germany will eventually be seen as a genius for figuring out how to attract this money and keep it within its borders,” he adds.

Germany’s crypto niche to go mainstream?

Cryptocurrency is still a niche investment in Germany. While only 17 percent of Germans own stocks, only about 2.6 percent own cryptocurrency.

German crypto investors typically skew younger, with a third of all German crypto investors being 34-years-old or younger. The more a person makes, the more likely they are to hold crypto as well, with two-thirds of all German crypto investors earning €800,000 a year or more.

That narrow niche is still big within the crypto community itself though. Around nine percent of the world’s Bitcoin nodes – the computers that run the secure list of transactions using that currency on a digital ledger known as the blockchain – are in Germany, and 14 percent of Ethereum nodes, another major cryptocurrency. That’s second only to the US.


A tablet screen displays the value of various cryptocurrencies in the Coinbase app. Photo: picture alliance/dpa | Fabian Sommer

Yet, while German ownership is still small, the community is visible enough to make others curious. That goes for even the traditionally risk-averse savings banks, or Sparkassen – where many Germans park their savings. The Savings Bank Association says around 10 percent of its regular customers already hold cryptocurrency, leading them to start offering customers the chance to invest in a crypto wallet directly from their checking accounts.

Many of the online brokerages popular with Germany-based investors, such as Trade Republic, Scalable, and DKB, also offer cryptocurrency wallets alongside their options to buy more traditional products like stocks and ETFs. Using their smartphone apps, crypto can typically be bought and sold with a few short clicks.

READ ALSO: How to protect your savings against inflation in Germany

The Modern Investor says that’s part of a culture that’s increasingly viewing crypto as just another normal part of the investing landscape. While crypto suspicion is still high globally, Germany has simply chosen to accept that crypto is here to stay, and has decided to benefit from it. 

“Germany has been one of the very few countries that have actually put forth cryptocurrency regulations. So a lot of internationally mobile investors have run to Germany as a bit of safe option,” the Youtuber says.

“Many countries don’t have any regulations at all. That makes things even less predictable. What happens to a crypto investor in the US or China if either of those countries simply ban it tomorrow? With Germany, people know that’s simply not going to happen now.”