Ultimate German Tax Guide 2023

Key Takeaways

According to the German Federal Statistical Office, the average tax refund in Germany last year (in 2022) was 1.072€.
For your tax declaration in Germany, you need your Lohnsteuerbescheinigung, your tax ID, and your tax class number.
The deductions are split in several baskets such as Werbungskosten, Sonderausgaben, Haushaltsnahe Dienstleistungen, etc.
These software programs will show you an estimate for your deductions before sending them to the Finanzamt.

Introduction: Ultimate German Tax Guide 2023

The average rebate for someone filing a tax declaration in Germany last year was 1.072€, so it’s worth doing (German Federal Statistical Office). Until you file a declaration, nobody knows what your personal tax benefits will be – that is what the tax declaration will tell you. Of course, you don’t have to send your tax declaration to Finanzamt if you owe them money – unless they tell you of course! This may happen – for example if you are married and in tax class 3 or 5.

Out of the 14,3 million people filing their taxes last year, 12,6 million received money back – an average of 1.072€ that we mentioned above. Of the 12,6 million, 8% received less than 100€, 57% received between 100€ and 1.000€, 33% were given 1.000€ and 5.000€, and a very lucky 2% got back more than 5.000€!

Of course, the other side of this was that 1,5 million tax filers had to pay Finanzamt an average of 1.152€. For 23% of them, this was less than 100€, 55% had to pay between 100€ and 1.000€, 19% were asked for between 1.000€ and 5.000€, and very unfortunate 3% had to cough up more than 5.000€.

Answering the following seven questions will let you file your taxes and see if you are one of the lucky 12,6 million.

Our financial planning will help you save more taxes in the future. Let's find out together how much you can save (PerFinEx is no tax advisor).

Get all required documents for the ultimate German tax guide 2023

What documents do you need exactly? First, you will need a document called the Ausdruck der elektronischen Lohnsteuerbescheinigung. This sums up all the taxes you paid last year and it serves as the basis for your tax declaration. In addition to this document, you must also have a personal tax identification number, or “Steuerliche Identifikationsnummer,” which you will receive from Finanzamt upon registering in Germany. Even newborns are issued a tax ID for identification purposes, and it consists of 11 digits that remain the same throughout your life.

You will also need your tax number, or “Steuernummer,” which is a 13-digit number with dashes that changes if you move to a different local Finanzamt, change your employment status (such as becoming self-employed), or get married. Your tax class, or “Steuerklasse,” which determines the amount of income tax you have already paid, is also required. The more taxes deducted from your payslip, the more likely you will receive a tax refund when filing your taxes. However, only married couples have the freedom to choose their tax class from the range of classes 1 to 6. Singles, divorced, and widowed individuals do not have this option.

It’s worth noting that Finanzamt no longer requires receipts and invoices to be submitted with your tax declaration, but it’s important to retain all relevant information in case Finanzamt requests to see them. Therefore, do not dispose of any documentation that could be useful for your tax declaration.

Fill in all your data in your tax declaration 2023

In general, almost all types of income are taxed in Germany, but how much they are taxed will differ by source. The Finanzamt recognizes seven different classes of income – agriculture, business, self-employment, employment, investments, rental, and other income. You can calculate your taxable income by adding up your income from these seven classes.

How much did you earn last year?

Generally, this includes income from outside Germany – although this depends on whether Germany has a double taxation agreement with the country in which you earned the money. If you are making money from outside Germany, you should consult a professional tax advisor – which Perfinex is not, we are a financial advisor.

Did you have Werbungskosten?

These include all kinds of job-related expenses. If you have less than 1.200€, you can claim a flat expense of that amount, and move to the next question. However, in the more likely event that you have more than 1.200€, you’ll need to sum up the total. This can include everything from driving to work to moving house to moving job. If we work from home, you can claim costs for this as well – including our internet and mobile phone. This could also include any training or professional development courses that you have done.

Once you really start thinking about it, there are probably quite a lot of expenses that are related to your job. Several years ago, there was a case of a football trainer who successfully claimed his Sky Sports subscription as an expense, although Finanzamt put up a bit of a fight about it!

Did you have Sonderausgaben?

This is where it starts to get interesting. These are expenses related to several costs that almost everyone has – such as your health insurance, whether public or private. The deduction for private health insurance is usually a little less, but the premiums can be much lower, so it can be worth it if you have a gross salary above €66.600.

Level I and II pensions offer tax-deductible contributions as well, including the public pension. This also includes Church tax, educational costs, and childcare costs, among many other things. It is always worth putting costs in a declaration – the worst that can happen is that Finanzamt will turn down your request, so there is no downside.

Did you have Haushaltsnahe Dienstleistungen?

These are household costs and can include everything from a cleaner to home maintenance. One lady claimed her dog walker, Finanzamt declined to recognize it. She went to court, and won – now you can deduct your dog walker from our taxes!

Do you need to claim Außergewöhnliche Belastungen?

These are extraordinary costs, and will probably not be applicable to most people. They could include anything from your home flooding to having a disabled person in your household who needs long-term care.

How do you file your taxes

Ok – you’ve done the hard bit, now how do you get your money? If you are an employee, with no outside income, you can file your return online in English with one of three software providers – SteuerGo, Taxfix, and Wundertax. They will show you an estimated tax return for free, then you can decide whether to send it to Finanzamt for 30-50€.

You can also use Lohnsteuerhilfeverein, an income tax assistance association, which is able to provide tax advice. However, it can be difficult to get an appointment as they have long waiting lists. If you have a complicated case, because you are self-employed or a business owner or you have income from outside Germany, you should use a professional tax advisor. This will cost more money, but it could be worth it, as they will deal with Finanzamt on your behalf.