Seven ways to pay less tax in Germany
Doing your tax return in Germany can be a famously complex process. The German tax authorities don't always make things easy for English speakers either.
However, forewarned is forearmed. Not only can knowing what can be claimed help you to prepare, it can also lead to a substantially lower tax bill. Together with tax expert Lars Weber, from Taxfix, The Local investigates some of the costs you can claim in Germany that you might not know about as an international resident.
If you've got young children, you're able to claim their childcare costs as a deductible on your tax return. As Weber tells us: "Many expats don't know that you can claim these childcare fees, you simply need to have a record of payment somewhere safe, that you can show if your local tax office wants to see your records."
2. Home office
Starting in late 2020, the Jahressteuergesetz 2020 (Annual Tax Act 2020) allows employees to claim up to €600 for both last year, and the following tax year, as home office expenses. This is known as the Home Office Pauschale ('Home Office Flatrate'). If you've been forced to set up a desk and laptop in a corner of your living room to work over the past year or so, you should be sure to claim this expense.
3. Job education and training
"If you need further training for your job, and that training is conducted in German, you should claim any associated costs on your tax return," says Weber. So, if you've been sent off to another city to do a course, especially overnight, be sure to keep your receipts, whether they be for hotels, petrol, or any other reasonable costs. If you're paying for this training out of your own pocket, you should be especially sure to keep your receipts for tax time.
4. Professional memberships
Similarly, if you're obliged to be a member of a German professional organization as part of your work, membership costs and other costs associated with maintaining your membership can and should be claimed. This is not solely restricted to those who require a licence or certification to do their job - if it's an expectation that you should be a member of an organisation in your professional field, then you should consider these a deduction.
5. School fees
If you have a family, it's not just childcare costs you should consider. "If you've got school-aged children who are attending a private or international school, then their school fees can be claimed as a deduction," Weber says. As always, be sure to keep full records, as if the Finanzamt ('Finance Office' for your region) come calling, they'll want to see them in their entirety, for the year in question.
While everyone who has been forced to work from home by the pandemic can claim the Home Office Pauschale of €600, those who have an entire room in their home dedicated to work can claim up to €1,200 in outfitting costs. "You can even claim the cost of curtains, if you can provide the receipts." Having a room solely dedicated to work can also lead to further deductions, such as power and internet costs, if you can prove that those costs were incurred in the course of your job.
Be careful however. As Weber warns: "Your local Finanzamt can be very strict in what is considered a workroom, and may come asking questions. Be sure that it is a distinct and separate room to your living area, and somewhere you're not spending a lot of time outside work."
7. The simple, fast tax solution
"If you're using Taxfix to lodge your return, you shouldn't worry about claiming things on your tax return", says Weber. This is because Taxfix is specifically designed with a question flow that guides you to answer only the questions that are required for your unique personal circumstances.
Everything is in simple, clear English, and your return can be completed in roughly 22 minutes. If your return is under €50, there is no cost, and if it's over, you play a flat rate of €39.99. Best of all, users usually receive around €1,051 back – more money to enjoy Germany with!
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