German tax return (Steuererklärung): should you file, and how much can you get back?

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:

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.

Deadlines for 2024 and 2025 tax years

Mandatory filers without advisor 31 July of the following year (e.g. 2024 return → 31 July 2025) Mandatory filers using a Steuerberater 30 April two years later (e.g. 2024 return → 30 April 2026) Voluntary filers 4 years after the end of the tax year (e.g. 2021 → 31 Dec 2025)

Extension requests: if you cannot meet the July 31 deadline, you can request an extension (Fristverlängerung) from your Finanzamt. Extensions are granted case by case and are not guaranteed.

Important for 2024 filers: the deadline for mandatory filers without an advisor is 31 July 2025. If you had any of the mandatory filing triggers listed above, you need to act before then.

Voluntary filers have 4 years — there's no rush, but filing sooner means getting your refund sooner.

What expats can deduct — key deductions

Moving costs (Umzugskosten) If you moved to Germany for work (or moved cities within Germany for a new job), your relocation costs are deductible. You can deduct:

• Actual documented costs (removal van, flights, temporary accommodation during the move), OR
• The flat-rate allowance (Umzugspauschale): €886 for a single person, €1,772 for a couple, plus €590 per additional household member. No receipts required for the flat rate.

This applies to moves from abroad to Germany if you took up employment here.

Home office (Homeoffice-Pauschale) Since 2023: €6 per day you worked from home, up to 210 days per year = maximum €1,260. No dedicated home office room required. Keep a record of which days you worked from home — your employment contract or remote-work agreement can help document this.

Commuting (Pendlerpauschale) €0.30 per km for the one-way distance between your home and your workplace, for every day you physically commuted. Capped at €4,500 per year unless you own a car (in which case unlimited). Applies regardless of how you travel (train, bike, car, or on foot).

Work equipment Items bought for work purposes and not reimbursed by your employer:

• Laptop, monitor, keyboard, mouse
• Work-specific software
• Ergonomic chair and desk
• Work clothes (only if specifically required — suits don't count)
• Professional books and subscriptions Items under €952 (incl. VAT) are deducted in the year of purchase. More expensive items are depreciated over their useful life.

Professional development Language courses you took to improve your German for work purposes, professional certifications, training courses, conference fees.

Dual household costs (Doppelte Haushaltsführung) If you maintained a household abroad (e.g. your family home in your home country) while renting in Germany for work, you can deduct:

• German rent up to €1,000/month (€12,000/year)
• Furniture for the German rental
• Regular return trips to the main household (max 1 per week)
• Registration and processing fees

This is a significant deduction for expats in their first year or two who still maintain a home abroad.

Bank account fees The annual fees for a basic German current account (Girokonto) are deductible as work expenses.

Trade union fees If you are a member of a German trade union (e.g. ver.di, IG Metall), membership fees are 100% deductible.

After filing: timeline, Steuerbescheid, and objections

Processing time: The Finanzamt typically processes returns in 6–12 weeks, though complex returns or busy filing periods (April–August) can extend this to 4–5 months.

The Steuerbescheid: You receive a written decision letter (Steuerbescheid) from your Finanzamt by post. It details the tax assessment — what you owe or what you will receive. If a refund is owed, it's paid to your IBAN within a few business days of the Steuerbescheid.

Interest on refunds: Since July 2022, interest on tax refunds starts accruing at 1.8% per year only after 15 months following the tax year end. Before that threshold, no interest is paid on refunds (or owed on back-tax demands). For voluntary filers, this is rarely relevant.

Objecting to the Steuerbescheid: You have 4 weeks (Einspruchsfrist) from receiving the Steuerbescheid to file a formal objection (Einspruch) if you disagree with the decision. Submit the objection in writing to your Finanzamt, stating which line items you contest and why. The Finanzamt then reviews and either corrects the decision or rejects the objection (after which you can appeal to a tax court).

If your return is selected for audit: Most returns are processed automatically. A small percentage are selected for review, where the Finanzamt asks for supporting documents. This is not a penalty — keep your receipts for 10 years and respond to any requests promptly.