Filing Taxes in Germany: The Complete Expat Guide

Overview of the German Tax System

Germany has a progressive income tax system with rates ranging from 0% to 45%, plus a solidarity surcharge (Solidaritaetszuschlag) of 5.5% on income tax for high earners, and church tax (Kirchensteuer) of 8-9% if you are a registered member of a church.

As an expat, you become a German tax resident if you have your habitual abode (gewoehnlicher Aufenthalt) in Germany, typically defined as being physically present for more than six months in a calendar year. German tax residents are taxed on their worldwide income.

Tax Classes (Steuerklassen)

Germany assigns employees to one of six tax classes that determine monthly withholding:

Class I: Single, divorced, or widowed employees

Class II: Single parents with at least one child

Class III: Married, where spouse earns significantly less or does not work

Class IV: Married, where both spouses have similar income

Class V: Married, spouse of a Class III taxpayer

Class VI: For second or additional jobs

For married couples, the most common combinations are III/V (one high earner) or IV/IV (similar incomes). You can change your tax class by filing a request at your local Finanzamt.

Income Tax Brackets (2025)

The progressive zone between 14% and 42% increases gradually, not in steps. This means the actual rate you pay depends on the exact amount within this range.

Who Must File a Tax Return?

You are required to file (Pflichtveranlagung) if:

You had income from multiple employers simultaneously

You or your spouse were in tax class III, V, or IV with factor

You received more than 410 EUR in wage replacement benefits (Kurzarbeitergeld, Elterngeld, etc.)

You had additional income exceeding 410 EUR (rental income, investments, etc.)

You received a letter from the Finanzamt requesting a return

You are self-employed or a freelancer (Freiberufler)

Even if not required, filing voluntarily (Antragsveranlagung) is often worthwhile as the average refund in Germany is approximately 1,063 EUR.

Key Deductions for Expats

Werbungskosten (Work-Related Expenses)

Commuting allowance (Entfernungspauschale): 0.30 EUR per kilometer for the first 20 km, 0.38 EUR above that, one way, for each workday

Home office deduction: 6 EUR per day, up to 1,260 EUR per year

Work equipment: Laptops, desks, professional books (items over 800 EUR net must be depreciated)

Professional development: Courses, certifications, language classes for work

Double household (doppelte Haushaltsfuehrung): If you maintain a second home for work, deduct rent up to 1,000 EUR/month plus one weekly trip home

Sonderausgaben (Special Expenses)

Church tax paid

Charitable donations to German-registered organizations

Private pension contributions (Riester, Ruerup)

Health and nursing care insurance contributions

Professional liability insurance

Aussergewoehnliche Belastungen (Extraordinary Expenses)

Medical expenses exceeding a calculated threshold

Disability-related expenses

Divorce costs (limited)

Specific Expat Deductions

Moving expenses for work-related relocation to Germany

Language course costs if needed for employment

Tax advisor fees for preparing your German tax return

Double taxation relief under tax treaties

Filing Deadlines

July 31 of the following year (e.g., July 31, 2026, for 2025 taxes)

February 28 of the second following year if using a tax advisor (Steuerberater)

Voluntary returns can be filed up to four years after the tax year

How to File Step by Step

Option 1: ELSTER (Official Portal)

ELSTER (elster.de) is the German government's free electronic filing system. The interface is in German and can be complex. You need to:

Register for an ELSTER certificate (takes 1-2 weeks by mail)

Complete the relevant forms (Mantelbogen, Anlage N, etc.)

Submit electronically

Option 2: Tax Software

Several tools handle German tax returns with English interfaces:

Taxation.ai - AI-powered with English support and automatic deduction optimization

Wundertax

SteuerGo

Taxfix

Option 3: Steuerberater

A German tax advisor costs 200-800+ EUR but provides expert guidance, especially valuable for complex expat situations, foreign income, or business activities.

Social Contributions

As an employee in Germany, the following are automatically deducted from your gross salary:

Health insurance (Krankenversicherung): ~7.3-8.5% (employee share)

Pension insurance (Rentenversicherung): 9.3%

Unemployment insurance (Arbeitslosenversicherung): 1.3%

Long-term care insurance (Pflegeversicherung): 1.7-2.3%

These contributions are partially deductible on your tax return.

Double Taxation Treaties

Germany has tax treaties with over 90 countries. If you have income from another country, the treaty determines which country has taxation rights. Common scenarios:

Employment income: Usually taxed where the work is performed

Pensions: Treaty-dependent, some taxed in source country, others in residence country

Investment income: Often subject to reduced withholding rates

Rental income: Typically taxed in the country where the property is located

Germany generally uses the exemption method with progression for treaty-covered foreign income: the income is exempt from German tax but increases the rate applied to your remaining German-taxable income.

Tips for Expats

Always file a tax return - even if not required, you will likely get money back

Keep all receipts - Germany values documentation

Claim the commuting allowance - it is based on distance, not actual transport costs

Deregister from church tax at the Standesamt if you do not wish to pay Kirchensteuer

Use Taxation.ai to handle the complexity of cross-border tax obligations automatically