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TAXES

German tax offices told to go easy on households and firms amid crisis

German tax authorities should show leniency to people in view of the energy crisis, a letter from the Finance Ministry shows.

A person types on a calculator.
A person calculating their taxes. Photo: picture alliance/dpa/dpa-tmn | Christin Klose

Taxpayers in Germany may not be able to pay their taxes due to the rocketing costs of energy, according to the Finance Ministry.

“The tax authorities will take this special situation into account appropriately for taxpayers” who are affected economically, the Ministry said in a letter coordinated with the tax authorities in the federal states. 

The letter says that additional pressure should not be placed on private households and companies due to the situation. 

It means that people should be able to defer tax payments or adjust advance payments if they request it.

READ ALSO: How the cost of living crisis is affecting people in Germany 

Those affected should contact authorities

The special treatment on income and corporate tax will initially apply until March 31st, 2023, according to the letter.

The Ministry refers to the huge economic consequences of the war in Ukraine and sanctions against Russia, and mentions how spiralling energy prices are impacting people’s budgets.

People affected are urged to contact their local tax office. 

The German government has brought in – and is planning more – measures to help support people financially. 

At the start of this month, for instance, the VAT rate on gas was temporarily reduced from 19 to seven percent.

READ ALSO: How to save money on your taxes in Germany

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TAXES

Germany to extend (and increase) tax rebate for people working from home

Starting in 2023, people working from home will be able to deduct €1,000 per year for working from home, up from the previous annual amount of €600. Here's what you need to know.

Germany to extend (and increase) tax rebate for people working from home

This means that in future, 200 instead of 120 days devoted to ‘home office’ will be eligible for the €5 per day deduction, which was originally introduced amid the Covid pandemic in 2020 and was set to expire at the end of this year.

READ ALSO: Germany plans tax rebate for people working from home

The sum can be deducted regardless if a separate workspace is used or available – meaning it applies to employees working on their couches or kitchen tables.

“This especially relieves families with smaller flats, who don’t have the space available for an extra office,” according to a statement on the German government’s website.

Employees who do have a separate study, though, can furthermore claim €1,250 back on their taxes.

However, certain criteria must be met – for example, the room must be used exclusively for professional purposes and must be separable from the rest of the apartment.

All workers in Germany also receive a lump sum of income-related expenses, which can be deducted each year: that amount is going up by €200 in 2022, bringing the total to €1,200.

The higher working-from-home allowance is part of the Annual Tax Act 2022, which was discussed by the Bundestag Finance Committee on Wednesday, and is set to be approved on Friday.

In September, about a quarter of employees in Germany were ‘continuing to work from home’ after Covid-measures were relaxed, according to the Munich-based Ifo Institute.

READ ALSO: Who benefits most under Germany’s tax relief plans

More tax changes

The new tax law will also introduce an ‘excess profits tax’ (officially called the “EU energy crisis contribution”) for companies that make large profits from oil, natural gas, coal and refineries. 

People with larger incomes will also be required to pay the tax on the gas price cap, which is set to be paid out to residents early next year. 

Vocabulary

Deduct – abziehen

Workspace – (der) Arbeitsbereich/ (der) Arbeitraum

Lump sum – (die) Pauschale

Income-related expenses – (die) Werbungskosten

We’re aiming to help our readers improve their German by translating vocabulary from some of our news stories. Did you find this article useful? Let us know.

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