Do you need to file? Mandatory vs voluntary
German income tax works on a withholding system (Quellensteuer): your employer deducts income tax (Lohnsteuer) from your monthly salary before you receive it, using your Steuerklasse. At the end of the year, the actual tax you owe is calculated — and the difference is refunded or collected.
Mandatory filing (Pflichtveranlagung): You are legally required to file a tax return if any of the following apply to you:
- You were self-employed or had freelance income during the year
- You had income from two or more employers simultaneously
- You received unemployment benefit (Arbeitslosengeld), parental benefit (Elterngeld), or sick pay (Krankengeld) above €410
- You earned more than €410 in investment income not already taxed with Abgeltungsteuer
- You or your partner changed Steuerklasse during the year (e.g. after marriage)
- You had income from abroad (including from a foreign employer, even partially)
- You had rental income in Germany
- A Finanzamt specifically requests a return from you
Voluntary filing (Freiwillige Veranlagung): If none of the mandatory cases apply, you can still file voluntarily — and in most cases you should. The voluntary window is 4 years from the tax year end. For 2021, you can still file until 31 December 2025.
Why most expats should file voluntarily — and how much they get back
Employed expats in Germany routinely receive refunds when they file voluntarily. The average tax refund in Germany is around €1,095 per year — and expats typically do better than average because of specific deductible expenses that apply to them (detailed in the deductions section).
Why refunds happen: Your Lohnsteuer is calculated based on your Steuerklasse, not on your actual income and expenses. The moment you deduct anything — work-related expenses, moving costs, professional subscriptions, home office — your actual tax liability drops below what was withheld. The Finanzamt refunds the difference.
Common refund drivers for expats:
- Moving costs: if you moved to Germany for work, a significant portion of your relocation costs is deductible
- Home office costs: since 2023 a flat deduction of €6 per day (max €1,260/year) is available, even without a dedicated room
- Professional development: language courses, training, certifications related to your job
- Commuting costs: 30 cents per km for the one-way distance to your employer (Pendlerpauschale), regardless of how you commute
- Work equipment: laptop, phone, desk, ergonomic chair — if used for work and not reimbursed
- Bank account fees: deductible as Werbungskosten
- Trade union fees: 100% deductible
The Arbeitnehmer-Pauschbetrag: Even if you don't itemise any deductions at all, the Finanzamt automatically deducts €1,230 (since 2022) as a flat work-expense allowance. Most employees have less than €1,230 of withheld work expenses factored in — so you get a refund just for filing, if your actual deductions exceed €1,230 or your Lohnsteuer was calculated with a conservative flat.
What you need before you start
1. Lohnsteuerbescheinigung Your employer sends you an annual earnings and tax certificate, either by post or via your payroll portal. It shows exactly how much you earned and how much Lohnsteuer, social security, and other deductions were taken. You cannot file without this.
2. Steueridentifikationsnummer (tax ID) Your personal 11-digit tax ID issued by the Bundeszentralamt für Steuern. You received this by post after registering your address (Anmeldung). It doesn't change — you use the same number for all future filings.
3. IBAN of your German bank account For the refund to be paid directly to you.
4. Receipts and records for deductions you plan to claim You don't need to submit receipts with your return — but keep them for 10 years in case the Finanzamt asks. Digital scans are fine.
5. Your previous year's Steuerbescheid (if you filed before) Useful for comparison but not strictly required.
How to file: ELSTER, tax software, or a Steuerberater
Option 1: ELSTER (free, but complex) ELSTER (Electronic Tax Return) at elster.de is the official free portal maintained by German tax authorities. It's comprehensive but designed for people who understand German tax law. Setting up an ELSTER account requires activating via a postal letter and takes about a week.
Best for: people comfortable with German bureaucracy or who have a straightforward return.
Option 2: Guided tax software (recommended for most expats — €30-50) Several apps translate the German tax system into plain language and guide you through your specific situation:
| App | Price | Notes |
|---|---|---|
| Wundertax | ~€34.99 | Clean UI, good expat support, English available |
| Taxfix | Free preview, ~€39.99 to file | App-first, very guided, limited edge cases |
| WISO Steuer | ~€39.99 | Comprehensive, used by German professionals |
| SteuerGo | ~€19.99 | Budget option, less polished |
All these apps submit via ELSTER in the background — you answer questions in plain language and they translate it. Your data is submitted directly to the Finanzamt; the app keeps no copy of your return.
Option 3: Steuerberater (tax advisor) A licensed German tax advisor (Steuerberater) will charge €250–800+ depending on complexity. Worth it if you have foreign income, complex investment situations, or are self-employed. Their extended deadline (October 31 instead of July 31) is also an advantage if you're filing late.