How to File Your First German Tax Return (Steuererklärung)

Ah, Germany. The land of poets, thinkers, fairytale castles, and… bureaucracy. If you’ve been here for a little while, you’ve likely encountered the glorious paperwork that comes with life as an expat. And now, a new beast has appeared on the horizon: the Steuererklärung, or the German tax return.

Just the word itself can send a shiver down your spine. It sounds complicated, official, and very, very German. I remember my first time. I had a shoebox full of receipts, a vague understanding of my payslip, and a deep-seated fear of the Finanzamt (tax office). But here’s the secret I wish I’d known then: filing a German tax return, especially for the first time, is not only manageable but is often your ticket to a surprisingly hefty tax refund.

Forget the fear. Think of it as a puzzle that, once solved, pays you back for your effort. This guide will walk you through every step, from figuring out if you even need to file, to finding the easiest way to do it, and understanding what you can claim back. Let's tame this bureaucratic beast together.

Do You Actually Have to File a Tax Return?

First things first, let's clear up the biggest question: are you legally required to do this? In Germany, tax filing falls into two categories: mandatory (Pflichtveranlagung) and voluntary (Antragsveranlagung).

You are generally required to file a tax return if any of the following applied to you during the tax year:

• You were self-employed or a freelancer.
• You and your spouse were registered under the tax class combination III/V or IV/IV with a "factor" (Faktorverfahren).
• You received more than €410 in untaxed income or benefits. This is a big one for many people and includes things like unemployment benefits (Arbeitslosengeld I), parental allowance (Elterngeld), or sickness benefits (Krankengeld).
• You had income from more than one employer at the same time (and it wasn't a "mini-job").
• You received a severance payment (Abfindung) from an employer.
• The Finanzamt has explicitly sent you a letter asking you to file.

If you are a "standard" employee (Tax Class I), single, with one job and no other significant income, you are likely not required to file. But this is where it gets interesting.

Why You Should File a Tax Return, Even If It's Voluntary

Here’s a number that should get your attention: €1,095. According to the Federal Statistical Office (Destatis), this was the average tax refund for those who filed a return in 2019 (the most recent year for detailed statistics). That’s not a small amount of money.

The German tax system operates on a pay-as-you-earn basis, where your employer deducts a standardized amount for taxes from your monthly salary. However, this system doesn't account for your individual expenses. By filing a tax return, you are telling the government about all your work-related costs, and in most cases, they'll agree you overpaid and send you some money back.

For voluntary filers, you have four years to submit your return. This means you can file your 2023 tax return anytime until December 31, 2027.

Decoding the German Tax Lingo

Before we dive deeper, let's get comfortable with a few key terms. You'll see these everywhere, so it's good to know what they mean.

Gathering Your Documents: Your Tax Filing Toolkit

Being organized is half the battle. Before you start, make sure you have the following documents handy:

1. Your Steuer-ID: This 11-digit number is your lifelong tax identity in Germany. If you can't find the original letter, it's usually printed on your payslips.
2. Your Lohnsteuerbescheinigung: This is the single most important document. It’s a summary of your gross salary, as well as the income tax (Lohnsteuer), solidarity surcharge (Solidaritätszuschlag), and church tax (Kirchensteuer) that you've already paid.
3. Your Bank Details (IBAN): So the Finanzamt knows where to send your refund!
4. Proof of Expenses: This includes invoices, receipts, and bank statements for anything you plan to deduct (more on this below). You don't need to send them all in, but you must have them ready in case the Finanzamt asks for proof.

The Magic of Deductions: How to Maximize Your Refund

This is where you get your money back. Germany allows you to deduct a wide range of expenses that are related to your work. The tax office automatically applies a blanket deduction of €1,230 for income-related expenses (Werbungskosten-Pauschale) for the 2023 tax year. If your actual expenses are higher than this amount, you should list them all to get a bigger refund.

For a first-time filer and expat, some of these can be huge.

Key Deductible Expenses for Expats:

• Relocation Costs (Umzugskosten): This is a massive one for your first tax return! If you moved to Germany for your job, you can deduct a huge range of costs, including:

  • Flights to Germany for you and your family.
  • Costs for the moving company.
  • Temporary accommodation costs for up to three months.
  • Travel costs for apartment hunting trips.
  • Even the cost of a German language course if your employer required it. You can either claim a lump sum (Umzugskostenpauschale) or itemize your actual costs if they were higher.

• Commuting Costs (Pendlerpauschale): You can claim a flat rate of €0.30 per kilometer for the first 20 kilometers of your one-way trip to work, and €0.38 for every kilometer after that. This applies regardless of how you get to work (car, bike, or public transport).

• Home Office Allowance (Homeoffice-Pauschale): If you worked from home, you can claim a flat rate of €6 for each day you worked primarily from home. For the 2023 tax year, this is capped at a maximum of €1,260 (which corresponds to 210 days). You don’t need a separate office room for this; your kitchen table counts.

• Work Equipment (Arbeitsmittel): Did you buy a new laptop, desk chair, monitor, or work-related software? You can deduct these costs. Items costing up to €800 (plus VAT) can be fully deducted in the year of purchase.

• Professional Development: Any costs for courses, seminars, workshops, or even books that are related to improving your job skills are deductible.

• Double Household (Doppelte Haushaltsführung): If you moved to Germany for work but still maintain your primary residence and financial ties in your home country (or another city), you may be able to deduct the costs of your second household in Germany. This includes rent (up to €1,000 per month), moving costs, and one trip home per month.

• Other Costs: Don't forget smaller things like job application costs (if you were searching for work), tax advisor fees, and work-related phone or internet bills.

How to Actually File: Your Three Main Options

You have your documents and a list of deductions. Now, how do you submit everything to the Finanzamt?

1. The Official Route: ELSTER

ELSTER (Elektronische Steuererklärung) is the official, free online portal from the German tax authorities.

• Pros: It’s completely free.
• Cons: It's entirely in German, the user interface is notoriously complex, and it offers no guidance. It's like being handed a government form and a pen. I would only recommend this if your German is very good and you have a solid understanding of the tax system.

2. The Expat-Friendly Route: Tax Software

This is the sweet spot for most expats. Several companies have created user-friendly, English-language web apps that guide you through the process with simple questions.

• Popular Options: Taxfix, Wundertax, and SteuerGo are the most well-known.
• How it works: You answer a series of simple questions in English ("Did you work from home?", "How do you get to work?"), and the software fills out the official forms in the background. It calculates your expected refund in real-time.
• Pros: English interface, easy to use, maximizes deductions, and relatively cheap.
• Cons: There's a fee, typically a flat rate of around €40-60 or a percentage of your refund, which you only pay when you decide to submit. This fee is, by the way, tax-deductible on next year's return!

3. The Professional Route: Tax Advisor (Steuerberater)

If your financial situation is complex—for example, you're a high-earning freelancer, have significant investment income from abroad, or own property—hiring a tax advisor is a wise investment.

• Pros: They handle everything, provide expert advice, can often find deductions you missed, and will deal with the Finanzamt on your behalf. They also extend your filing deadline significantly.
• Cons: It’s the most expensive option. Fees are regulated by law and are typically based on your income, making it several hundred euros or more.

Deadlines and What Happens Next

Mark your calendar! The deadlines are strict.

• For the 2023 Tax Year (filing in 2024):
  • Mandatory Filing Deadline: September 2, 2024.
  • Mandatory Filing with a Tax Advisor: May 31, 2025.
  • Voluntary Filing Deadline: December 31, 2027.

After you’ve submitted your Steuererklärung, it's a waiting game. The Finanzamt will process your return, which can take anywhere from 4 to 12 weeks on average, but sometimes longer.

Eventually, you will receive your official tax assessment notice, the Steuerbescheid, in the mail. This document will show the final calculation and confirm the exact amount of your refund or the tax you still owe. If you're getting a refund, the money will typically be transferred to your bank account within a week or two of you receiving the letter.

Your Takeaway: Just Do It

The German tax system, like many things in Germany, is built on rules and precision. It might seem daunting from the outside, but it’s a logical process. For the vast majority of expats, filing a tax return is not a chore to be feared, but an opportunity to be seized.

Don’t let the German language or the complex forms intimidate you. Use the tools available—especially the excellent English-language tax software—to guide you through the process. By investing a few hours to gather your documents and answer some simple questions, you are very likely to be rewarded with a nice financial bonus. So go ahead, conquer that Steuererklärung, and claim the money that’s rightfully yours. You’ve earned it.