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TAXES

Why people in Germany have longer for their tax return this year

MPs in the German Bundestag voted through a number of tax relief measures on Thursday, as well as extending the deadlines for filing the 2021 tax return. Here's what you need to know.

Man opens letter from tax office
A man opens a letter from the tax office. Photo: picture alliance/dpa/dpa-tmn | Christin Klose picture alliance/dpa/dpa-tmn | Christin Klose

Wait, we have longer to file our tax returns?

Yes, that’s right. Due to the Covid pandemic, the German government has extended the deadline for submitting the 2021 tax return.

Those who have a tax advisor help them with their tax return now do not have to submit the return for 2021 until the end of August 2023, while those who do the tax return themselves will be given until the end of October.

In ordinary times, people with a tax consultant are given until the end of the next year to file their return, while people who file it themselves are given until July 31st the following year. 

However, people have been given extra leeway to file their tax returns since the start of the pandemic in 2020.

The law was voted through on Thursday with a large majority of MPs from the traffic coalition of the Social Democrats (SPD), Greens and Free Democrats (FDP) and also had the support of the opposition CDU/CSU.

The far-left Die Linke and the far-right Alternative for Germany (AfD) parties both abstained.

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What else is new?

On Thursday, the Bundestag also voted through a number of tax relief measures, which are intended to support households and businesses who were hit hard by the Covid crisis in 2021. 

They include a €5 per day allowance for those who had to work from home and new ways for companies to write off profits from 2021 against losses they suffered the year before. 

Health and care workers are also set to benefit from the tax relief measures. Any bonuses received for working through the pandemic will be tax-free up to €4,500. 

READ ALSO: German government to extend ‘working from home’ allowance

This is the second round of tax relief measures that the government has pushed through in as many weeks. 

On May 12th, parliamentarians voted to retrospectively raise the tax-free allowance for 2022 to €10,347 per year – an increase of €363 compared to the previous year’s tax-free amount of €9,984.

They also voted to increase the amount of expenses automatically written off by the Finanzamt in 2022. This has gone up by €200 to €1,200. 

Meanwhile, people who commute long distances to work will now be able to write off an extra three cents per kilometre in their tax return. Under the revised commuter allowance, people who travel more than 21km to work can write off 38 cents for every kilometre over this distance. 

The government expects tax losses of €235 million this year as a result of the latest tax relief measures alone – and it estimates that, by 2026, the treasury will be down more than €11 billion. 

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ENERGY

Should tenants in Germany be shielded from energy price hikes?

Gas prices have more than tripled in the past year, prompting tenants' rights advocates to call for more social support and a cap on energy costs.

Should tenants in Germany be shielded from energy price hikes?

The German’s Tenants’ Association is calling on the government to put together a new energy relief package to help renters deal with spiralling energy costs.

Gas has become an increasing scarce resource in Germany, with the Economics Ministry raising the alert level recently after Russia docked supplies by 60 percent.

The continued supply issues have caused prices to skyrocket. According to the German import prices published on Thursday, natural gas was three times as expensive in May 2022 as it was in May a year ago.

In light of the exploding prices, the German Tenants’ Association is putting the government under pressure to offer greater relief for renters.

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Proposals on the table include a moratorium on terminating tenancy agreements and a permanent heating cost subsidy for all low-income households.

The Tenants’ Association has argued that nobody should face eviction for being unable to cope with soaring bills and is urging the government to adjust housing benefits in line with the higher prices. 

Gas price cap

Renters’ advocates have also joined a chorus of people advocating for a cap on consumer gas prices to prevent costs from rising indefinitely.

Recently, Frank Bsirske, a member of the parliamentary Green Party and former head of the trade union Verdi, spoke out in favour of capping prices. Bavaria’s economics minister and Lower Saxony’s energy minister have also advocated for a gas price cap in the past. 

According to the tenants’ association, the vast majority of tenants use gas for heating and are directly affected by recent price increases.

At the G7 summit in Bavaria this week, leaders of the developed nations discussed plans for a coordinated cut in oil prices to prevent Russia from reaping the rewards of the energy crisis. 

In an initiative spearheaded by the US, the group of rich nations agreed to task ministers will developing a proposal that would see consumer countries refusing to pay more than a set price for oil imports from Russia.

READ ALSO: Germany and G7 to ‘develop a price cap’ on Russian oil

A gas price cap would likely be carried out on a more national level, with the government regulating how much of their costs energy companies can pass onto consumers. 

Strict contract laws preventing sudden price hikes mean that tenants in Germany are unlikely to feel the full force of the rising gas prices this year

However, the Tenant’s Association pointed out that, if there is a significant reduction in gas imports, the Federal Network Agency could activate an emergency clause known as the price adjustment clause.

This would allow gas suppliers to pass on higher prices to their customers at short notice. 

The Tenants’ Association has warned that the consequences of an immediate market price adjustment, if it happens, should be legally regulated and socially cushioned.

In the case of the price adjustment clause being activated, the government would have to regulate the costs that companies were allowed to pass onto consumers to prevent social upheaval. 

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