Last updated on August 16th, 2024 at 03:32 pm
We’ve put together this Remitly guide to give you a comprehensive overview of the German tax filing process for non-residents, from determining your tax liability to submitting your income tax return.
Who needs to file taxes as a non-resident in Germany?
Anyone with taxable income from German sources must file taxes to comply with the country’s tax laws.
Suppose you have a permanent home in Germany or spend more than 183 days within a calendar year in Germany, including trips and holidays. In that case, you are considered a resident for tax purposes and must declare both domestic and foreign income.
If you are considered a non-resident, you only need to pay taxes on income from a German source. This includes the following revenue streams:
- Wage tax: Non-resident expats working for a German employer.
- Self-employed: Freelancers are not committed to a single employer and work for multiple clients. If you provide services in Germany as a freelancer or contractor but live abroad, you must pay taxes in Germany on your German income.
Some countries, including the U.K., the U.S., Spain, France, Canada, India, Japan, Australia, China, and Switzerland, have double taxation treaties with Germany. Non-residents from these countries can avoid paying income tax twice. The Federal Ministry of Finance has the full list of countries.
What documents do you need to file taxes as a non-resident in Germany?
The first step to filing your German income tax assessment is to collect all the required documents.
We’ve put together this concise list to help you:
- Passport or ID card: Proof of identity will be requested.
- Tax ID (Steueridentifikationsnummer): This is your individual tax number issued by the German tax authorities (Finanzamt).
- Income statements: Documents showing proof of income, whether that’s wage slips, invoices, dividends, or rental payments.
- Bank account details: For receiving any tax refunds you’re entitled to.
- Expense receipts: Documentation for any deductible expenses, such as health insurance contributions or business expenses.
- Tax return form: The appropriate form for non-residents, available on the ELSTER online platform.
- Double taxation certificates: To avoid being taxed both in Germany and your home country, if applicable.
Getting your German Tax ID
You must have a German Tax ID (Steuernummer) to file taxes. Register with your local tax office (Finanzamt) to get one.
Here’s how to apply:
- Prepare the required documents: This includes your passport, proof of your residential address in Germany and, if you are self-employed or starting a business, the appropriate registration form (Fragebogen zur Steuerlichen Erfassung).
- Submit your documents: Including any required forms. You can ask your tax office for clarification on which forms you need. If you are not physically present in Germany, you may need to appoint a Fiscal Representative.
You will receive your Steuernummer by mail. It may take several weeks for your application to be processed.
How to file taxes as a non-resident in Germany
Now that your documents and Tax ID are in place, let’s look at the filing procedure:
- Choose a filing method: The German tax authorities allow you to submit tax returns either in paper format or entirely online.
- Online: Use ELSTER, the official online tax filing portal in Germany, which is available in English.
- Paper: You can obtain the tax return forms from the Finanzamt or download them from their website, fill them out, and send them by post.
- Fill out the tax return form: Include every source of income, the applicable tax deductions, and credits.
- Submit the form: You can submit your completed tax declaration online via the ELSTER platform or mail it to your local Finanzamt office.
- Pay any taxes due: Ensure you’ve settled any outstanding tax liabilities to avoid fines or penalties.
Key tax deadlines in Germany
The tax calendar in Germany runs in parallel to the calendar year. This helps with remembering key dates for filing your returns. There are set deadlines for submitting your tax return for the previous year.
The most important dates to know are:
- Annual tax return deadline: All taxes should have been successfully filed by July 31 of the following calendar year. For instance, the tax return for the year 2023 would be due by July 31, 2024.
- Extended deadline: If you need more time, you might consider the services of a tax advisor. Professional tax advisors are useful for those with more complicated arrangements—and they can present your taxes until February 28 of the subsequent tax year.
- Quarterly prepayments: Self-employed individuals and those with significant non-wage income may need to make quarterly prepayments based on estimated tax liabilities. These payments are generally due on the tenth day of March, June, September, and December.
Penalties
If you fail to meet any of the above deadlines, you’ll be subject to the following surcharges:
- Late Filing Penalty: Generally 0.25% of the tax due per month
- Interest on Overdue Payments: 0.5% per month on overdue amounts
Tax classes in the German tax system
Your tax class influences your tax rate. There are six tax classes:
- Tax Class I (Steuerklasse I): For single individuals, including those who are divorced or widowed.
- Tax Class II (Steuerklasse II): For single parents.
- Tax Class III (Steuerklasse III): Typically for married individuals who are the sole or primary earner in the household.
- Tax Class IV (Steuerklasse IV): For married couples with similar incomes.
- Tax Class V (Steuerklasse V): For married individuals with no income or whose total income is less than their spouse´s.
- Tax Class VI (Steuerklasse VI): For individuals who have multiple jobs.
Choosing the right tax class helps you avoid paying more income tax than you need to.
What are the income tax rates in Germany?
Germany has a progressive tax rate for both residents and non-residents. Based on your annual income, the income tax brackets for 2024 are as follows:
- 0% to 14%: up to 11,604 EUR
- 14% to 42%: 11,605 EUR to 66,760 EUR
- 42%: 66,761 EUR to 277,825 EUR
- 45%: over 277,825 EUR
Tax residents also pay a Solidarity Surcharge, as well as a Church Tax if they are a member of a recognized religious community. Non-residents are not liable for these payments.
You can deduct various costs from your earnings to lower your tax liability. Depending on your situation, the following costs may be tax-exempt:
- Business expenses: Deductions for self-employed individuals or business owners
- Travel and commuting costs: Related to work
- Health insurance contributions: Tax-free only if you pay into a German health insurance policy
- Social security contributions: Including unemployment insurance and care insurance
- Charitable donations: To approved organizations
- Lump sum deduction: Standard tax relief for various expenses
Common mistakes to avoid
Tax declaration is a tricky business, so here’s how to avoid falling into some of the common tax pitfalls in Germany. These include:
- Incorrect Tax ID: Always verify your Steueridentifikationsnummer.
- Missing deadlines: File on time to take advantage of tax reliefs and avoid penalties.
- Inaccurate numbers: Accurately report all income and deductions.
- Ignoring double taxation agreements: Take advantage of tax treaties between Germany and your country of residence to avoid being taxed twice on the same income.
Where to get help
- Tax advisors and consultants: Find a registered tax consultant here. Pricing will depend on your specific situation.
- ELSTER support: Offers online help on their website.
- Finanzamt: Contact your local tax office for specific questions.
- Official websites: Check the German tax authorities for comprehensive information.
Filing taxes as a non-resident in Germany can be complex. When in doubt, a tax professional can help steer you in the right direction. Alternatively, the official German Tax Office portal is available (mostly) in English.
FAQs
Do non-residents pay taxes in Germany?
Non-residents with a German source of income have taxpayers’ obligations.
What documents are needed for German taxes?
Required documents include tax forms, proof of income, bank account details, and other relevant German tax documentation.
How can a non-resident file a tax return in Germany?
Use the German tax portal, ELSTER, for online tax filing. The tax return submission process involves filling out and submitting the required forms via the platform. You could also file your tax return in paper form and send it by mail.
What is the deadline for filing taxes in Germany?
The deadline to file your taxes is typically July 31 of the following year. You could access possible extensions to February 28 by working with a tax advisor. Late filing attracts penalties.
Do I have to report income earned in other countries?
As a non-resident, you only need to report taxable income generated from German sources.
Can I file my German taxes in English?
The official language for filing taxes in Germany is German. However, if you need assistance in English, many tax consultants (Steuerberater) speak English and can assist you with your tax return. Alternatively, some online tax filing service providers can guide you through the tax filing process in English.
What is the Church Tax?
This is an additional percentage of income tax (usually 8 or 9%) that you must pay if you are a member of a recognized religious community in Germany. This is generally only for German residents.
What is the Solidarity Surcharge?
The Solidarity Surcharge is an additional tax for German residents introduced in 1991 to help finance the costs associated with the reunification of East and West Germany. In 2021, the surcharge was abolished for most taxpayers.
Can I claim unemployment benefits as a non-resident in Germany?
You may be eligible for unemployment benefits as a non-resident, depending on your circumstances. Contact the Employment Agency (Agentur für Arbeit) for further information about your eligibility and how to apply.
What is Withholding tax?
Withholding tax applies to non-residents in Germany with certain incomes, including Interest Income, Dividend Income, and Capital Gains. Consult a tax advisor to ensure compliance and help minimize your tax burden based on your circumstances.
