How can I get a German tax refund?
You will only get a tax refund if you submit a tax return and if the final tax calculated in that tax return is lower than the tax that you pre-paid throughout the year.
So when is this the case?
You only worked part of the year
As an employee, your employer will deduct income tax from your salary every month.
The income tax rate that they will use is based on a yearly income of 12 monthly salaries.
So if you only started working half-way through the year, e.g. because you were still in university the first half of the year, you will only earn 6 monthly salaries that year, but pre-pay income tax on based on too high a tax rate, one that is based on double your real income that year.
- your first job out of university started on 1. July 2019 and pays 4,000€ gross a month.
- you’re unmarried, over 23 and don’t have a child
- you have public health insurance at Techniker Krankenkasse, with a Zusatzbeitrag of 0.7%.
Your employer will use the tax rate for a yearly gross salary of 48,000€, which means that you will have pre-paid in 2019 in total 4,143.48€ in income tax through the monthly deductions from your salary.
However, your correct income tax amount is based on only 24,000€ (since that is all you will have earned that year) and is 2,209.17€.
[of the 24,000€, only 18,779.12€ are taxable income (zvE): 24,000 – [0.88x2x372x6 – 372×6] RV – 50×6 AV – 0.96x306x6 KV -71×6 PV – 1,000 AN-PB – 36 SO-PB = 18,779.12]
So you overpaid 1,934.31€ in tax, which you will get back by filing an income tax return for 2019.
If you don’t file a tax return, you won’t get that money back.
As an unmarried employee with no side income, you don’t have to file a tax return, but you can do so voluntarily (Antragsveranlagung) for up to 4 years after the tax year ended.
So in this case, if you want those 2,209.17€ back, the 2019 income tax return has to be filed by December 31st 2023.
Note: if you were working outside Germany for the first half of the year, you will only get tax back if your gross monthly salary/profit outside Germany was lower than your German salary now.
You got married
If you got married this year, the tax benefits of being married are applied retroactively to the start of the year.
You just need to file a tax return.
Unless your and your spouse’s income were exactly the same, you will get a tax refund by filing a joint tax return.
- your spouse also became resident in Germany before the end of the year, or
- if you’re an EU/EEA national and your spouse (whatever their nationality) lives in another EU/EEA country or in Switzerland (§1a (1) Nr. 2 EStG, H1a “Wohnsitz in der Schweiz” EStH) and:
– at least 90% of your family income are directly taxable in Germany, or
– your family income that wasn’t directly taxable in Germany is at most 2xGrundfreibetrag (in 2019: 18,336€; in 2020: 18,816€)
You had deductible costs
There are a lot of costs that you can claim for in your tax return which will lower your taxable income, i.e. which are deductible.
Lowering your taxable income means that you will get a part of your pre-paid income tax back.
Among the deductible costs are:
- your commuting costs, a flat rate of 0.30€ per km per km of the simple distance between your home and your workplace, per day that you worked that year, no matter whether you drove, biked, walked or beamed yourself there, but limited at 4,500€ per year if you weren’t using your own or the company car. Or your real yearly train/public transport costs, with no limit.
- any costs that you had for your job and that weren’t reimbursed by your employer, e.g. to attend a conference (conference fee, travel and extra subsistence costs), for your home office if your employer doesn’t provide you with another place to work, your laptop if you need one for your work and your employer didn’t provide one, and so on.
- your educational costs, e.g. what you spent for your university studies that year or on training courses. If this was your first degree (Bachelors) you can claim for up to 6,000€ education costs per year (Ausbildungskosten), for all further degrees (second Bachelors or a Masters degree) and training courses, there is no limit to what you can claim for (Fortbildungskosten).
- moving costs if you had to move to take up this job. You can claim both the real costs you had (travel costs, hotel cost when flat hunting, transport of your furniture, overlapping rental costs, … ) plus additionally a flat rate (Umzugspauschale) that’s meant to cover all the other miscellaneous moving expenses for which people usually don’t gather receipts. This additional flat rate for miscellaneous moving expenses is, if you moved:
– within Germany: over 800€ per adult (just you, or you and your spouse) who moved
– from another EU country: over 1,100€ per adult (just you, or you and your spouse) who moved
– from outside the EU: over 1,150€ per adult (just you, or you and your spouse) who moved
If this was your second move for your job within the last 5 years, the above flat rates rise by 50%.
- the cost of your second home (doppelte Haushaltsführung) in Germany, that you needed because it’s where your job/business is, while you still keep up your first home because your spouse/children live there. You can claim up to 12,000€ a year for the warm cost (= including utility costs and TV licence fee) of your second home (rent or depreciation&interest if you bought it).
You can also claim for items for furnishing the second home like kitchen cabinets, a stove, a fridge, crockery, cutlery, washing machine, a table, chairs, a bed, lamps, curtains (the idea behind this is that you need extra furniture for the second home since all the “good” furniture is back home, being used by your family). If an item cost more than 952€ including VAT, you cannot claim for its whole cost immediately but have to depreciate it over its lifetime, which for furniture is assumed to be 13 years! So be moderate and buy cheap furniture and appliances for your second home.
You also get to claim for your trips back home to your spouse/children, if you fly the cost of the flight ticket, in all other cases a flat rate of 0.30€/km times the simple distance between your second and first home, or the real train costs.
For the first 90 days you can also claim 24€ per day for additional meal costs, i.e. 2,160€ in total – the idea behind that is that during that period you subsist on expensive takeout, until you orient yourself in the new city and learn where to buy food that you cook yourself, or until your wife also moves and again starts cooking for you 😉
- health costs not covered by insurance (außergewöhnliche Belastungen)
- financial support that you pay to an indigent parent over 65 (if the parent has a doctor’s note that he/she can’t work, also under 65), or to your child under 25 for whom you don’t get Kindergeld. Support you pay for an indigent partner (= someone you’re not married to who stays at home). Up to the amount of the Grundfreibetrag (in 2019: 9,168€, in 2020: 9,408€), less if that person lives in a country with a lower cost of living.
- the child tax allowance (Kinderfreibetrag). There are two cases for which you will save tax when using the child tax allowance:
– you’re a high-earner, which means that you will save more in tax by applying it than you got in Kindergeld
– you didn’t get any Kindergeld, either because you forgot to apply for it or you had the wrong residency permit
childcare costs for a child under age 14, e.g. for a day nursery, kindergarten or after-school care (Hort). Only 2/3 of the costs will count, and those 2/3 are only allowed to be up to 4,000€ per year per child, so you can only claim for costs of maximum 6,000€ per year per child.
school fees for your child, for a school in Germany/EU/EEA or for any “Deutsche Schule” worldwide. You can claim for 30% of the school fees, but those 30% are only allowed to be up to 5,000€ per year per child, so you can only claim for costs of maximum 16,666.67€ per year per child.
- you donated money/goods/your time (e.g. by volunteering as a sports coach and refusing the pay/expense allowance) to a German/EU/EEA good cause or you gave money/goods to German political parties.
Eligible good causes are German/EU/EEA public institutions (e.g. a public university, school, library , hospital or museum) and German/EU/EEA charitable, benevolent or religious organisations that are recognised as such in their country and German political parties. Eligible German political parties are the ones that fulfill §2 Parteiengesetz.
Membership fees to such eligible recipients are also deductible, except for membership fees for some clubs among them being sports clubs, cultural/heritage clubs, carnival clubs, veteran clubs and gardening clubs.
For donations/membership fees up to 200€ that were done by bank transfer, your bank statement is the necessary donation receipt (Zuwendungsbestätigung, also called Spendenquittung), but it has to clearly show an eligible organisation/institution as the recipient and what the donation was for, e.g. you wrote “donation to provide a free breakfast in school for children from low-income families” in the subject line when you transferred that money, or “Mitgliedsbeitrag …-Partei”, see §10b EStG and §50 (4) Nr. 2 EStDV.
In all other cases, the recipient has to provide you with a receipt for the donation, which in the case of a German recipient has to have the format set down in Anhang 37 Amtliches Einkommensteuer-Handbuch. If it is a non-German recipient, you will have to bring proof that the recipient is eligible, and for the receipt it would be a good idea to use the Anhang 37 Amtliches Einkommensteuer-Handbuch format as a template (note: if a document is not in German, the Finanzamt can ask for a translation before accepting it).
If you gave up to 20% of your income to a German/EU/EEA good cause, what you gave will reduce your taxable income.
If you gave more than 20% of your income to a good cause, the amount above 20% of your income will be carried over to the next year and will reduce your taxable income then.
If you gave to German political parties, you get back 50% of the first up to 1,650€ (if you’re married: 3,300€) as a tax rebate, and the next up 1,650€ (if you’re married: 3,300€) will lower your taxable income.
Example: you’re married and gave 10,000€ to eligible German political parties. This means that you will get back 1,650€ (= 50% of the first 3,300€) of the income tax that you and your spouse have prepaid. Additionally, your taxable income will be lowered by the next 3,300€. The remaining 3,400€ (10,000€ – 3,300€ – 3,300€) are of no benefit to you, because unlike donations to a good cause, amounts given to political parties that exceed the limit are not carried over to the next year.
- your contributions to German/non-German public pension insurance (you’re also allowed to contribute voluntarily regardless of nationality), or to a special kind of German private pension called Rürup pension which pays out a life-long pension, starting with age 62 at the earliest and can also include occupational disability.
But they will only have an effect if your total contribution to public and Rürup pensions didn’t exceed a certain limit (Höchstbeitrag zur knappschaftlichen Rentenversicherung) which changes every year. In 2019, this is limit is 24,305€ for a single, and 48,610€ for a married couple (if your spouse doesn’t use their part, you’re allowed to use it)
- the alimony you pay your separated/divorced spouse who lives in Germany/another EU country/a EEA country (Norway, Iceland, Liechtenstein), but only if that (ex-)spouse taxes said alimony as income (Realsplitting). If you are an EU/EEA national, your (ex-)spouse is also allowed to live in Switzerland (H1a “Wohnsitz in der Schweiz” EStH).
You can only claim for up to 13,805€ per year.
Employees automatically get an allowance for job-related costs of 1,000€ (Arbeitnehmer-Pauschbetrag), this is already considered by your employer when calculating how much income tax to deduct from your salary.
This means that any costs that you had because of your job like commuting costs, conference costs, home office, educational costs related to your present job, moving costs and second home costs will only have an effect if their summed up amount exceeds 1,000€.
- an employee lives 60km away from his workplace, and commuted to work by train on 110 days from July to December. His train ticket cost 1,600€.
- he also attended a technical conference because of his job, but his employer did not reimburse him the conference fee, travel and hotel costs and extra subsistence costs of in total 800€.
His commuting costs are:
- flat rate: 0.30 €/km x 60km x 110 days = 1,980€, since that’s more than his real train costs of 1,600€
His job-related conference costs were 800€.
His employer already automatically considered a deduction of 1,000€.
If he now claims for the commuting and conference in his tax return, only:
- (1,980€ + 800€) – 1,000€ already used up allowance = 1,780€ will further lower his taxable income.
You paid for services connected to your home (§35a EStG)
You can get back 20% of the labour cost (including VAT) for services that were performed in your home, e.g.:
- janitor cost, boiler maintenance fee, chimney sweep, repairs to the building, …
These costs are listed in the yearly service charge overview (Nebenkostenabrechnung) that your property management company (Hausverwaltung) sends you for your flat (they usually have a special section “§35a EStG”)
- any repairmen you personally paid to fix things in your flat/house. The building costs for new builds are excluded!
- your plumber, your gardener, your cleaning lady, your ironing lady, your dog walker, your pet sitter, your chimney sweep, the heating/boiler maintenance, your movers, the locksmith you paid to get back in when you forgot your keys inside the flat …
- fee to get connected to the main gas line (but not in a new build), e.g. because before you had an oil tank; to change the water lines; to change the drains; to change electrical lines, …
This measure was introduced to discourage work under the table, so in order to get that tax refund some additional conditions apply :
- you need to have an invoice and are not allowed to pay cash (so pay by bank transfer, card or even Paypal).
If the locksmith or the movers pressure you to pay in cash on the spot, tell them your Steuerberaterin forbade you to do so, since otherwise you can no longer use those labour costs in your tax return!
- there are some limits to how much tax you can get back per household, but these limits won’t be reached under normal conditions.
For example, you can only get a tax refund of up to 1,200€ back for repairmen, which means that the part of the labour cost that exceeds 6,000€ won’t have any effect. But how many people pay over 6,000€ in labour costs in a year for repairs?
- these costs cannot have already been claimed for in another section of your tax return (well, yes, of course double-dipping is forbidden).
So if you let a flat, the property management company will send you a certificate about the “§35a EStG”-costs that were incurred, but for you, these are just expenses that lowered your rental profit.
Only your tenant will be allowed to get a “§35a EStG”-refund for these labour costs, so as a landlord don’t forget to issue your tenant your own “§35a EStG” certificate to use in their tax return, which will include all “§35a EStG”-costs from the Hausverwaltung, minus the ones pertaining to repairs (since repairs are not paid by the tenant, but by the landlord).
Just to be clear:
You can only get a tax refund through §35a EStG from the income tax that you actually paid/owed that year.
If your income was so low that you didn’t pay any income tax, you won’t get extra money out of the system through §35a EStG.
You had capital income
If you had capital income like interest, dividends, or a profit from selling shares/funds in a German bank, that bank will have withheld taxes on that income:
- 25% Abgeltungsteuer (which is a flat rate income tax) and 1.375% solidarity tax, if you don’t pay church tax, i.e. in total 26.375%
- if you pay church tax and live in Bavaria or Baden-Wuerttemberg: 24.51% Abgeltungsteuer, 1.35% Solidaritätszuschlag and 1.96% church tax, i.e. in total 27.82%
- if you pay church tax and live somewhere else: 24.45% Abgeltungsteuer, 1.345% Solidaritätszuschlag and 2.2% church tax, i.e. in total 27.995%
I hope you remembered to tell the bank to exempt the first 801€ (1,602€ if you’re a married couple) of your capital income from tax by giving that bank a Freistellungsauftrag.
You are only allowed to exempt up to 801€ (1,602€) across all German banks, so if you’re single and you had income from two German banks, you could, for example, exempt 500€ at one bank and 301€ at the second one.
If you forget about the Freistellungsauftrag it’s no biggie, you will get the overpaid tax back by filing an income tax return.
But that overpaid tax won’t be that much, it can only be up to:
- if you don’t pay church tax: 211.26€ (422.52€ if you’re married)
- if you pay church tax and live in Bavaria or Baden-Wuerttemberg: 222.84€ (445.68€ if you’re married)
- if you pay church tax and live elsewhere: 224.24€ (448.48€ if you’re married)
A much bigger saving happens:
- if your personal income tax rate is below 25%. In that case, you can apply in your tax return to have the interest income taxed with your personal, lower income tax rate instead.
- if you get dividends from a company of which you own at least 25% (or just 1% if you also happen to work for that company). In that case, you can apply in your tax return that you will get a part of the tax that was withheld by the company (26.375% of 100% of the dividends) back, by opting to tax only 60% of the dividends, but with your personal income tax rate. This will mean a hefty tax refund in most cases.