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Five simple steps to getting your German tax refund

It can’t be avoided – wherever you live, taxes are a certainty. However, the taxes we pay provide an enormous benefit to society, in that they provide a social safety net.

Five simple steps to getting your German tax refund
Photo: Getty Images
Nowhere is this more evident than in Germany, where the wealthiest can expect to pay up to 45% in 'Lohnsteuer', or income tax. Unemployment benefits, pension payments and ‘Kindergeld' (literally ‘child money') for parents are all significant benefits paid for by German taxpayers. 
 
Filing a tax return in Germany is not compulsory (unless you fit into a few select categories). You'd be crazy not to however! With the tax-filing app Taxfix, a return typically takes under half an hour to complete – and the average person gets back more than €1,000. If you're an expat and unfamiliar with how German tax deductions work, you could easily be paying more than your fair share of tax. Here are five simple steps to help you make sure you get your return in on time – and get back all the money you're entitled to. 
 
 
1. Gather your paperwork – and keep it in order 
 
Germans prize organisation and good record keeping as a virtue, and if you follow them in this respect, you'll be well-prepared for tax season. Firstly, do you know the final deadlines for filing a tax return? The last chance to file for 2016 comes on December 31st this year, as part of a four-year rolling cycle.
 
Using a single folder for each tax year and a hole punch will often suffice to keep your receipts and invoices in order, with dividers for different categories, such as fuel receipts, energy bills, food expenses during business trips, and software.
 
If you're intent on reducing your paper waste, there are a number of apps, such as Simple Scan and Microsoft Office Lens, that allow you to photograph your paperwork, turning them into readable PDF files that you can store somewhere on the cloud. This can be handy and a major timesaver at tax time, when you're hunting down figures – new technology means that figures can often be copied and pasted from these files directly. 
 
 
2. Keep up to date on what you can claim.
 
The federal government in Germany often updates legislation regarding what people can claim as deductions against their tax. There are always attempts to close loopholes and maintain tax revenues. Generally, your everyday, regular travel costs to work can be claimed, as can a percentage of home office costs such as internet and power bills. 
 
Other common tax deductions for employees include business literature and work equipment. Personal deductions can be made for a variety of things, including health insurance premiums, childcare expenses up to the age of 14, and charity contributions.
 
Depending on what you do, professional insurance that you may have taken out can also be claimed. However, it pays to check websites such as the official federal government Make It In Germany site for updates in the lead up to tax season. If you're genuinely confused about what you can claim, any tax adviser should be able to help you for a minimal fee. 
 
 
3. Get the help you need in an app (in English!) 
 
Paradoxically, Germany's complex tax system has given rise to a number of apps, websites and services that streamline the process of lodging a tax return. Multiple popular services, including Taxfix, use a series of guided conversational questions to lodge your return, calculating your estimated return based on the answers and data that you provide.
 
The apps work with Elster, the German government's tax return software, to process your return speedily. While you can also file a paper return, and some prefer this method, electronic services save not only time, but a significant amount of paperwork. 
 
Each of these electronic tax services have different strengths – Taxfix especially has been designed with the needs of expats in mind. All questions are in simple, direct English and have been drawn up to make sure you get back all the money you're due under German law. The app aims to make it simple for everyone to claim their full tax refund, even with no prior tax knowledge – so you won't be confronted with confusing jargon!
 
Photo: Taxfix
 
4. Don't rush it – time really is money
 
You can easily feel overwhelmed or confused by the rules of the German tax system. While the temptation may be to click through each question in an app as quickly as possible, you can save potentially hundreds of euros by reading each question carefully, and ensuring you can justify each answer with your records. Even doing so, it won't take anymore than an hour at the most – and isn't that worth a chunk of money landing in your account?
 
5. Avoid hidden costs with a transparent service
 
The amount tax accountants charge can vary wildly. With Taxfix, all costs are set and transparent. If your estimated return is under €50 and you're not obligated to make a return, submitting via Taxfix is free.
 
If your estimated refund is over €50 (or you're obligated to file), there's a single fee of €39.99. That's it. Furthermore, this fee can be claimed against your next return, as tax consulting fees.
 
Ready to find out if you're due a tax refund? Taxfix is available via their website and their app, which can be downloaded from both Google Play and the Apple App Store. Try it out today to see how much money you could get back.
 
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Reader question: How can I find a German tax advisor?

The German tax code is complex enough to confound native Germans and foreigners alike. Finding an expert to handle it for you has many advantages—but how do you find the right one?

Reader question: How can I find a German tax advisor?

Even in “normal” years, when you’re not having to work out the tax implications of ‘home office’ or the reduced working hours of Kurzarbeit, filing a tax return in Germany is daunting. Still, it often pays to do it and a good tax advisor – especially one who speaks English or your native language – can pay off. But how do you find that person and what should you be looking for?

Price is comparable, so look for other things

Tax advisory is a strictly regulated profession in Germany, to the point where tax consultants, or Steuerberater, have a fixed schedule of the rates they’re allowed to charge for certain services. Their rates are also capped depending on what your income is. A complicated case will still obviously be more expensive than an easier one, simply because it’ll take longer. If you make more money, you may also be charged more. But due to price regulations, one tax advisor isn’t able to charge significantly more or less than another for a similar case. So you’re free to let go of the stress of finding the best price and focus on finding the right tax advisor for the services you need.

“If they’re called a ‘Steuerberater’ and they have a stamp of accreditation, that person is qualified to do your tax return. Simple,” says Kathleen Parker, Managing Director of Red Tape Translation. “Now they may offer other services or forms of advice, like bookkeeping or legal advice. These are different and for those, they’re free to charge you what they like. But the price of doing and submitting your tax return is tightly regulated.”

READ ALSO: EXPLAINED: How to save money on your taxes in Germany

Finding someone familiar with international cases

As with so many things in Germany, finding help in a language you speak well is a priority when looking for the right tax advisor. But beyond navigating the technical terminology, you may well need someone familiar with international cases. That’s especially true because German residents who receive income from abroad, whether they’re self-employed doing work for international clients, or they own investments abroad, will typically have to file a tax return declaring it for that year.

“Check the LinkedIn and Xing profiles of different tax consultants and have a look at where they may have studied or worked before. That should give you some idea about whether they speak either English or your native language, and if they are familiar with particular international topics,” says Dirk Maskow, an independent tax advisor based in Berlin and Düsseldorf. “If they’re bilingual, there’s a good chance they’ll have their website in both languages.”

Depending on the firm, the tax advisor may have a lawyer on staff or be in a partnership with one. If so, check their list of available services. Legal advice on international tax cases will often be more expensive than similar advice for domestic cases, so it should be easy to spot in the price list if the firm offers such a service. If they do, contact them and ask if they might be able to handle your specific case. Certain relocation apps and services, such as Ark One, RelocateMe, or Settly, may also work with specialised tax advisors who have the expertise for your individual case. Some websites, like Steuerberater Guru, will even help you compare advisors.

READ ALSO: Everything you need to know about your German tax return in 2022

The trust factor

Once you’ve found someone with the credentials you need, what’s next before you sign on?

“It’s not surprising, but they best way to find the right tax advisor for you is often through the recommendation of a friend who is satisfied with the one they have,” says Maskow. “That’s because tax consulting has a lot to do with trust. That’s even truer if the language and country is new to you and you don’t always know what’s going on. Make sure you have an initial discussion – not just to see if the tax advisor is able and willing to deal with your case, but to make sure you have a good overall rapport.”

READ ALSO: Everything you need to know about paying taxes in Germany

Vocabulary

Tax consultant or advisor – (der) Steuerberater/(die) Steuerberaterin

Tax – (die) Steuer

Tax return or tax declaration – (die) Einkommensteuererklärung

Client – (der) Mandant / (die) Mandantin

Income – (die) Einkünfte

Capital assets – (die) Kapitalvermögen

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