Germany has the most complicated taxation system in the world. In the country of rules, regulations and law, finance people and politicians went too far with detailing every single case and finding a financial context for it. Now, none can master this taxation system by heart and even experts mostly need a lot of time and research to answer some questions. In such cases practice says: in any too complicated system, there are “flaws”.
I’m still relatively new in Germany (almost 3 years) but I could relatively win some experience in its taxation system thanks to the support of a great friend. As the applied country policy is: “Pay as much as you can, and we can discuss by the end of each financial year whether you paid too much”. I said lets share some learned “taxation” tips with you guys to be able to legally get some hundreds of euros back from the state ;-) As it usually is the case.
Overview of the used software:
I personally use the official software of the Finanzamt, called Elster. It’s indeed less intuitive than other (paid) private software but it’s free and the most reliable one. When you open it, you’ll notice that it’s a set for forms, too long forms.
Here we should separate some cases. Most common ones are: when you are student or employed, single or married, or when you are married but live in another place than you partner. I tried here to sume up all what I know and it’s mainly about married and employed people:
Page 1: this is where you should enter your personal details and contact information and all that boring stuff. (Allgemeine Angaben)
Some data are not simple to find. For example
- Tax number (Steuernummer), you should get this number through a brief from your Finanzamt. Some employers write it on your payslips. If you could not find it, give a call to the Finanzamt.
- If there are several Finanzämte in your city, check on their website which one you are binded to (which takes care with your financial data). They are usually ordered alphabetically. For example my last name starts with A, so I am binded to Finanzamt Stuttgart I.
- Identifikationsnummer: This number is unique per person in Germany. You should receive it by post upon your registration (Anmeldung) at the City Hall (Rathaus)
Page 2: Here it gets a little bit more serious, it’s about “Irregular Spendings” (Sonderausgaben). What you can enter here as a normal individual is:
- Line 45 – Spenden und Mitgliedsbeiträge: Membership fees of association / NGOs or organization you take part of, such student associations (AIESEC, IAESTE…) and professional organization (VDI, DVA…). And also if you have made a donation to a humanitarian or religious institutions (Yes, in Germany you get part of the donations back from the state)
Page 3: This page handles topics related to household-related occupations (Haushaltsnahe Beschäftigungen)
- Line 73: it’s the most interesting line in this page. When you ever called a hand-worker to fix something in your house (water leak, electricity problem) or even when you call the key service when you accidentally forget your keys at home, you can enter in this line what costs stayed behind the incidents.
It’s for all you financial company-related data.
- Page 1: Angaben zum Arbeitslohn (Salary-Related Statements): It’s the most simple one as you should only copy the data in the Lohnsteuerbescheinigung which you receive from your company around February of each year. (if you haven’t received it, as your HR business partner / accounting department to at least send it per email to you). If your resigned and changed the company, you should add both Lohnsteuerbescheinigungen in Elster (the first one should be sent to you some weeks after your last day in the former company).
Tip: Mind that the “eTIN” (elektronische Transfer-Identifikations-Nummer) is not anymore required in Elster (since 2010). It’s okay when you put it but it would not be a problem if you don’t (in case you didn’t find it in your documents for example)
Page 2: Werbungskosten (Work-related tax deductions), here it starts getting more and more interesting as this is the most used page in the software. Here we can enter spendings which are indirectly related to our work. For example, when we go to and from work everyday, when we buy formal clothes needed from some jobs (like sales) or even when we go to job fairs to apply for some positions. So let’s start:
- Lines 31-35: Entferungspauschale (distance flat). In Germany, you get 30 cent from the state for each traveled kilometer to work (one way). So just enter how many days you worked the previous year, the address of the company and the distance separating it from where you live. (Don’t forget to deduct holidays and sick leaves from working days)
- Line 41: work tools / needs (Arbeitsmittel), here you can enter whether you bought for example work-related clothes such as security shoes, costumes for some jobs (like sales, management, controlling) etc.
- Line 42: to fill in in case, you must have a “work” room in your house. I haven’t dealt with such a case but if you guys have more info about this, just let me know to update my article :-)
- Line 43: if you participated in any paid training which is supposed to help you with your work (and which your company might have refused to refund) you can add its costs here. A typical example in Germany is German courses.
- Line 45: deals with costs related to job applications. For example if you traveled to some job fairs in other cities and made a lot of copies of your application documents to present them at those fairs, you can state its costs here. Same applies, if you had to travel to another city for a job interview or something similar.
Tip: You should be using your internet connection at home when you apply for a job or when you look for some information related to your work (professional use) or even doing home office. So your internet use can reach up to 50% of professional use. This means you can state half the costs of your internet (yearly costs) as Werbungskosten.
- Line 47: Sonstige Werbungskosten. Typical cases here are:
- Bank account (yearly) fees. Your bank accounted is there mainly to receive your salary :-)
- When you change your working permit at the Ausländerbehörde because you will start a new job (not for other private reasons like marriage), the state will pay you a part of these fees back. So state how much this change costed to you in this line.
- Line 85: This part deals with the case where you might have (for a certain period of time) paid for 2 rents because of work reasons. Typical examples are:
- When you had, for some reasons, to keep you first apartment and you had to rent a second one because it’s closer to your work.
- When your wife and you work in different cities and thus live during the week in 2 different houses.
this sheet will be automatically filled up when you complete your Anlage N. So fortunately you won’t need to deal with it :-)
Some other tips:
- in case you had to move out from your current apartment and look for another one closer to work (relocation), and the latter is at least 20 km away from the first one. You are eligible for a Umzugspauschale (relocation package). Depending on how many people moved out and in which period, you can enter following amounts without providing a proof (Nachweis)
Relocation costs include:
- Pay attention to what costs you are providing. Try to be quite exact in your inputs. The Finanzamt will deeply examine your data and verify what you had provided.
- Don’t put any costs which have been refunded by your company. Relocation costs are usually refunded by employers.
That’s it. I tried to sum up all what I know about this topic in one article and I hope this will be helpful for you. If you have a question don’t hesitate to put a comment below and I’ll answer as soon as I can. I will also try to update this article with more content and information I get from you guys accordingly.
Finally, try to share this if you believe it will help other people in your network. Let’s support and help each other, and don’t forget: Sharing is caring :-)
Good luck with the German taxation system !