Taxes in Germany :

Are you living in Germany as an expat and wondering how to file your tax return or optimize your tax situation?

Do you need to file a German tax return (Steuererklärung)? What types of income must be declared? Are you eligible for tax deductions or credits? How do marriage, children, or your tax class (Steuerklasse) affect your taxes?

In this complete guide, we answer the most common questions expats have when filing taxes in Germany and how to avoid common mistakes.

Is Filing a Tax Return in Germany mandatory?

You are required to file a tax return in Germany if :

• You received any income beyond your regular salary (which is already subject to withholding by your employer):
  • capital gains – even from non-German sources
  • Freelance or self-employment income (even small amounts) - mini-jobs are exempt from filing requirements
• You received income that is not taxed in Germany but affects your tax rate (Progressionsvorbehalt), including salary from your home country during the year you moved to Germany, unemployment benefits (Arbeitslosengeld), parental benefits (Elterngeld)
• You are in tax classes (Steuerklasse) 3, 5, or 6

Why File a Tax Return voluntarily ?

• Many expats get €1,000 to €2,000 in refunds, even if single with no children.
• Your employer calculates and withholdes taxes based on limited info. Filing a return lets you adjust your actual taxable income by claiming deductions
• Thus, even if not required, filing a return can be very beneficial

How and When to File your taxes in Germany?

Filing options

• Online on Elster.de or with a user-friendly tax software (e.g. SteuerGo, Taxfix)
• a Steuerberater or a Lohnsteuerhilfeverein

Use Datenabruf to pre-fill your return — the system imports your income data automatically from the tax office

Deadlines for tax return in Germany

• Mandatory filing: July 31 of the following year (N+1). With a tax advisor: deadline extends to February 28 (N+2)
• Voluntary filing: up to 4 years (e.g., submit your 2021 return by Dec 31, 2025)

What Income Should You Declare in Germany?

• Employment income – Use your Lohnsteuerbescheinigung (yearly wage statement)
• Freelance/side business income
• Capital income (interest, dividends)
• Rental income – if the property is located in Germany

Do I need to declare income from Abroad?

It depends on the type of income and the tax treaty (if any) between Germany and your home country:

• In any case you have to declare capital gains (e.g., savings accounts, stocks, etc.). Even if they’re tax-exempt in your home country, they must be declared in Germany.
• If you own property in your home country, you may have to declare the rental income here in Germany depending on the tax treaty with your home country

Avoid double taxation

Double taxation agreements (DTA) aim to prevent double taxation. If the income has already been taxed abroad, you may be eligible for a tax credit. Check the agreement for your home country. Germany has concluded such agreements with over 70 countries.

What expenses can you deduct from your taxes?

Germany, like other countries, allows deductions, tax credits, and reductions to help lower your tax bill.

The most common way to save: reduce your taxable income through deductible expenses.

Common tax-deductible expenses

• Work-related expenses (commuting, equipment, second residence)
• Mandatory social security contributions
• Some investments (!)
• Some insurances
• Alimony payments
• Donations to charities
• Education and childcare costs
• Expenses linked to property investment in Germany
• Household services (this is a tax reduction, not a deduction)

How much can I save?

Say your employer taxed your €110,000 gross salary at source. But you had €20,000 in deductible expenses.

With a correct tax return, your actual taxable income is €90,000, not €110,000. If your marginal tax rate is ~47%, that means you overpaid ~€9,400, which the tax office will refund after processing your return

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Marriage, Children & Tax Classes

Does being married reduce Taxes?

Germany uses income splitting (Ehegattensplitting) if you file jointly (Zusammenveranlagung).

Example: One spouse earns €100,000, the other earns €0.

• Average tax rate for a taxable income of 100 000€ : 32%
• Average tax rate for a taxable income of 50 000€ : 21%

Thanks to income splitting, a couple where one partner earns 100k and the other earns 0 is treated as a couple where both earn 50k. The couple’s average tax rate is therefore 21% – and this rate is applied to the 100,000. Without splitting, the person earning 0 would obviously pay nothing, and the person earning 100,000 would be taxed at 32% on the full 100,000.

> lower average tax rate for the couple

Note: Only legal marriage is recognized in Germany — civil partnerships are not eligible

Can I optimize Taxes with Steuerklasse?

In order to take individual circumstances into account in the income tax withheld at source by the employer, there are different tax classes (Steuerklassen). For example, if you're single, you're in tax class 1. If you're married, you can choose between the 4/4 or 3/5 combination. The amount withheld at source varies depending on the chosen combination, but the total amount of tax ultimately paid (adjusted when filing the tax return) is the same. With the 4/4 combination, people often get a tax refund, whereas with the 3/5 combination, it's common to have to pay additional tax.

Declaring Children for Tax Benefits

En France, on applique le quotient familial – 1 enfant rapporte une demie part. Quotient familial et impôt sur le revenu : comment ça marche ? | Ministère de l’Économie des Finances et de la Souveraineté industrielle et numérique

In Germany, you get a fixed child allowance (Kinderfreibetrag) — around €10,000 per child per year, which reduces your taxable income. If your household earns €100,000 and you have one child, you may be taxed on only €90,000.

Important: the Kindergeld (child benefit paid monthly) is offset against the tax benefit. The tax office applies whichever is more advantageous — you can’t have both fully

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In a nutshell : Even if you’re not legally required to file a tax return, it’s often financially smart to do so: you may recover taxes through deductions. If you didn’t have many expenses, you can plan new investments to lower next year’s tax burden.

Contact Expat Finance- for a personalized consultation and maximise your tax return in Germany. At no cost to you !