How to get a tax rebate in Germany without submitting a tax return
If you don't want to wait months for your tax refund, you'll be pleased to know that workers in Germany can boost their net income before even submitting their tax return. Here's what you need to know.
As 2023 draws to a close, many people in Germany are feeling understandably gloomy about their bank balances. Prices have been rising at an alarming pace for months, making it even harder to set aside money for the Christmas holidays or make financial plans for 2024.
If you can relate, you'll be pleased to know there's a way of boosting your tax-free income in December and into next year - simply by filling in an online form in November.
This is a system known as the wage tax reduction, and almost every employee in Germany can take advantage of it.
What's the wage tax reduction?
The wage tax reduction - known in German as the Lohnsteuerermäßigung - is a way for employees to write off their income-linked expenses before the year is over and take home more money each month.
Usually, employees would need to wait until 2024 to submit their tax return and receive a rebate for 2023. They would then continue paying the same amount of tax as usual in 2024 and would have to wait until 2025 to write off any expenses for that tax year.
With the Lohnsteuerermäßung, however, employees can tell the tax office about their expenses in advance and start benefiting from lower taxes almost immediately.
For example, you may have bought a new work laptop for €1,000, spent €300 on work-related training and then paid a further €700 for your commute and other business trips.
You would then apply for a wage tax reduction based on this €2,000 of annual expenses and this would be deducted from your payslip as a tax-free allowance each month.
For example, if you apply in February and your reduction starts in March, €200 of your income will be tax-free for each of the remaining ten months of the year.
READ ALSO: I just got married in Germany. How does this affect my taxes?
When and how should I apply?
Technically you can apply for your wage tax reduction at any time, but if you want to get your rebate this year rather than next, you should aim to submit your application by November 30th.
That way your tax-free allowance for the entire year will be taken into account in December's payslip and you can reap the benefits of your rebate ahead of Christmas.
You can apply by filling in a simple two-page form known as the Antrag auf Lohnsteuerermäßigung (found here for 2023 and here for 2024). This can be done by printing and posting the forms, but by far the easiest way to submit them is to do it via the Elster portal online.
If you're married and share a joint tax burden with your spouse, you can submit an application for both of you at the same time.
Once you've filled in your application, the same annual tax-free sum will usually apply for the next two years - though you will need to inform the tax office straight away if there are any changes.
READ ALSO: Which benefits are you entitled to if you have children in Germany?
What else should I know about the wage tax reduction?
Before you apply for your Lohnsteuerermäßigung, it's important to check if it's actually worthwhile in your case - and whether you meet the criteria. You should have a minimum of €600 in work-related expenses if you want to apply for the tax reduction.
However, this limit is a little misleading, since work-related expenses are only counted above the tax-free lump sum, which in 2023 is set at €1,230. That means that in reality you will need at least €1,830 in income-linked expenses in order to apply.
That means that the Lohnsteuerermäßung will only benefit people who have high work-related expenses, such as commuting costs, office equipment, business travel or training or renting a second property near your place of work.
A laptop, schedule and cup of coffee on a work desk. Photo by Nick Morrison on Unsplash
That said, there are many ways you might be able to reach this threshold even if you didn't space out on a price new office set-up this year.
One helpful thing to know is that, from 2023, you can claim up to €1,000 back for working from home throughout the year. You can also claim for things like donations, school fees, special expenses like medical costs, as well as household expenses such as cleaners and craftspeople.
Single parents, people with disabilities and people who pay maintenance to former spouses are also eligible for tax relief and allowances, so make sure you do your research.
READ ALSO: EXPLAINED: The top tax deductions often overlooked by employees in Germany
Another key thing to note is that if you get a wage tax reduction you must submit a tax return for that year.
Many employees in Germany only submit their tax return voluntarily, but if you apply for tax write-offs throughout the year you will have to demonstrate to the tax office that these expenses were real.
The deadline for the 2023 tax return (if you are submitting it yourself without the help of an accountant) is September 2nd 2024.
READ ALSO: What you need to know about Germany's extended tax filing deadlines
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As 2023 draws to a close, many people in Germany are feeling understandably gloomy about their bank balances. Prices have been rising at an alarming pace for months, making it even harder to set aside money for the Christmas holidays or make financial plans for 2024.
If you can relate, you'll be pleased to know there's a way of boosting your tax-free income in December and into next year - simply by filling in an online form in November.
This is a system known as the wage tax reduction, and almost every employee in Germany can take advantage of it.
What's the wage tax reduction?
The wage tax reduction - known in German as the Lohnsteuerermäßigung - is a way for employees to write off their income-linked expenses before the year is over and take home more money each month.
Usually, employees would need to wait until 2024 to submit their tax return and receive a rebate for 2023. They would then continue paying the same amount of tax as usual in 2024 and would have to wait until 2025 to write off any expenses for that tax year.
With the Lohnsteuerermäßung, however, employees can tell the tax office about their expenses in advance and start benefiting from lower taxes almost immediately.
For example, you may have bought a new work laptop for €1,000, spent €300 on work-related training and then paid a further €700 for your commute and other business trips.
You would then apply for a wage tax reduction based on this €2,000 of annual expenses and this would be deducted from your payslip as a tax-free allowance each month.
For example, if you apply in February and your reduction starts in March, €200 of your income will be tax-free for each of the remaining ten months of the year.
READ ALSO: I just got married in Germany. How does this affect my taxes?
When and how should I apply?
Technically you can apply for your wage tax reduction at any time, but if you want to get your rebate this year rather than next, you should aim to submit your application by November 30th.
That way your tax-free allowance for the entire year will be taken into account in December's payslip and you can reap the benefits of your rebate ahead of Christmas.
You can apply by filling in a simple two-page form known as the Antrag auf Lohnsteuerermäßigung (found here for 2023 and here for 2024). This can be done by printing and posting the forms, but by far the easiest way to submit them is to do it via the Elster portal online.
If you're married and share a joint tax burden with your spouse, you can submit an application for both of you at the same time.
Once you've filled in your application, the same annual tax-free sum will usually apply for the next two years - though you will need to inform the tax office straight away if there are any changes.
READ ALSO: Which benefits are you entitled to if you have children in Germany?
What else should I know about the wage tax reduction?
Before you apply for your Lohnsteuerermäßigung, it's important to check if it's actually worthwhile in your case - and whether you meet the criteria. You should have a minimum of €600 in work-related expenses if you want to apply for the tax reduction.
However, this limit is a little misleading, since work-related expenses are only counted above the tax-free lump sum, which in 2023 is set at €1,230. That means that in reality you will need at least €1,830 in income-linked expenses in order to apply.
That means that the Lohnsteuerermäßung will only benefit people who have high work-related expenses, such as commuting costs, office equipment, business travel or training or renting a second property near your place of work.
That said, there are many ways you might be able to reach this threshold even if you didn't space out on a price new office set-up this year.
One helpful thing to know is that, from 2023, you can claim up to €1,000 back for working from home throughout the year. You can also claim for things like donations, school fees, special expenses like medical costs, as well as household expenses such as cleaners and craftspeople.
Single parents, people with disabilities and people who pay maintenance to former spouses are also eligible for tax relief and allowances, so make sure you do your research.
READ ALSO: EXPLAINED: The top tax deductions often overlooked by employees in Germany
Another key thing to note is that if you get a wage tax reduction you must submit a tax return for that year.
Many employees in Germany only submit their tax return voluntarily, but if you apply for tax write-offs throughout the year you will have to demonstrate to the tax office that these expenses were real.
The deadline for the 2023 tax return (if you are submitting it yourself without the help of an accountant) is September 2nd 2024.
READ ALSO: What you need to know about Germany's extended tax filing deadlines
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