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TAXES

EXPLAINED: The best apps to help you track your German taxes

Like much of the country's bureaucracy, German tax law is complicated. But there are plenty of useful deductions for those in the know. Here are a few apps that might help you stay ahead of it.

Published: 7 May 2024 14:57 CEST
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Several software apps can simplify your German taxes. Photo by John Schnobrich on Unsplash

Whether it’s helping you to not fall afoul of German tax authorities, spot all your possible deductions, or to get support in English, the right tax app can save you a lot of headaches when filing your German taxes.

ELSTER may be available in English, but it won’t necessarily help you do all those. Hiring a professional tax advisor is always an option, but they can come with fees running into the thousands of euros per year – which go up the more you earn.

So which apps should you consider? Well as with many things in Germany – it depends a bit on your situation. Many tax apps here are designed either for employees specifically or are tailored to freelancers and the self-employed. Which one you are will have a lot of influence on your available choices.

READ ALSO: Germany’s official online tax portal is now available in English

Apps for employees

Even though your tax and social insurance contributions automatically come off your payslip every month and employees don’t technically have to file a tax return – there are some years when it makes sense to file one.

This happens when you think you have enough deductions to get a decent refund – or if you have to declare certain income like capital gains or inheritance.

The good news though is that tax apps for employees tend to be more straightforward and come with fewer fees.

Apps specifically designed for employees, which have information in English, include Wundertax, Taxfix, and SteuerGo. In addition to English and German, some of these apps, like SteuerGo – have additional languages like Romanian or Polish.

These apps have a fairly standard rate of around €35 per tax return. Some even have reduced bulk rates if you decide to do more than one tax return with them.

For this, you’ll typically get some support – although very specific and complicated cases may still leave you reaching for the phone to call a professional tax advisor.

You’ll also get the functionality to add proofs of your expenses as needed, checks to see if you’ve claimed everything you can, and simplified electronic submission to the tax office.

READ ALSO: Should you get a tax advisor in Germany – and how much does it cost?

Apps for freelancers and the self-employed

Freelancers and the self-employed are not only required to file annual tax returns – but have far more complicated declarations.

Typically, they must charge, claim, and pay VAT – and are eligible for a host of additional deductions that employees aren’t able to claim. Those who have clients based elsewhere in the EU often also have to file additional paperwork.

That’s why apps made for freelancers in Germany are typically more sophisticated and come with more support. They also cost more, but are still a lot cheaper, however, than paying a professional tax advisor.

Apps specifically designed for the self-employed in Germany that are available in English include Accountable and Sorted. German alternatives include apps like FastBill and LexOffice.

The top of the line professional plans on these apps typically come with a tax-deductible price tag of €20 a month. Some, however, may offer a discounted plan if you’re a Kleinunternehmer, or a firm with less than €22,000 a year in revenue.

Others have free starter versions for people just beginning their businesses.

Other services and functionality can differ greatly. Some apps will help you create invoices. Others will offer you professional tax advice one-on-one for an additional hourly fee. It’s best to shop around with some of these to find the one that best matches your needs as a freelancer.

READ ALSO: Can I have a freelance side gig as an employee in Germany?

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TAXES

EXPLAINED: How do you close down a freelance business in Germany?

Leaving the country? Got a steady job offer you can’t say no to? Winding down your self-employment activities in Germany still requires taking a few bureaucratic steps.

Published: 15 May 2024 09:07 CEST
Updated: 15 May 2024 10:57 CEST
EXPLAINED: How do you close down a freelance business in Germany?

Striking out on your own as self-employed is one of the scariest – and potentially most rewarding things – you can do. In Germany, it also comes with its own set of rules around tax and social insurance.

But there are times when – for whatever reason – it may be time to move on.

Whether it’s because you have an exciting new opportunity or things haven’t quite worked out the way you hoped due to economic pressures – winding down self-employment the right way is crucial to avoid gaps in your health and social insurance coverage in Germany.

The steps you have to take are also a bit different depending on if you are new self-employed (Freiberufler) or have a trade licence (Gewerbe) – with some steps not being necessary for new self-employed.

Trade licences are automatically cancelled if the licenced person dies or the company ceases to have financial assets.

Resigning the trade licence or declaring it dormant

New self-employed people like writers or speakers don’t need to go through this step, as they don’t need a trade licence.

Those who have a trade licence will need to contact their competent local authority and resign it, or declare it dormant (withdrawing the licence). If you’re only winding down temporarily, declaring your trade licence dormant instead of de-registering completely may save you a few headaches later.

You may have to do this in person at your local trade office – or Gewerbeamt – depending on whether your local authority allows online de-registration or not. You’ll need to bring your official ID, trade licence, confirmation of registration and possibly an extract from the trade register. Fees are dependent on your local authority and can range from being free to €25.

You can declare the date you intend to resign the licence – which can be in the future. To ensure no gaps in your social insurance protections, including health insurance, set this date for the day before whatever comes next. For example, if you’re starting a new job on January 1st set the date for your trade licence to expire as December 31st.

The trade office will typically notify your local tax office, so you won’t need to do this yourself.

Notifying your tax office

If you’ve had to resign your trade licence, you can skip this step as your trade office will do it for you. If you’re a Freiberufler without a trade licence you need to resign, you’ll have to notify your local Finanzamt, or tax office, yourself.

Luckily, this is a pretty easy step.

First, you need to decide whether you’re ceasing operations completely or wanting to continue them part-time. If you’re ceasing completely, you’ll end up surrendering your self-employed tax number.

You don’t have to do this though. If you think you may still carry on some self-employed business as a side gig, you can inform the tax office that you intend to do so and keep your number.

At that point, the tax office should treat you as a Kleinunternehmer – or a small business making less than €22,000 a year. Having this status means that you will not need to pre-pay taxes or charge VAT on your invoices for freelance side projects.

If you derive any income from your side gig in the future though, you’ll still have to file a tax return.

READ ALSO: Can I have a freelance side gig as an employee in Germany?

Notifying your health insurance

While different private plans in Germany may have different notification requirements, if you have public health insurance in Germany, you should notify them that you’re winding up your self-employed business. Specifically, advise them exactly what date you’re wrapping up.

Again, this should be right before you start your new job or leave the country, to ensure no gaps in your coverage.

If ending your self-employment in Germany, take care to ensure that there’s no gaps in your health insurance coverage, by giving the right date for when you’re ceasing activity. You don’t want to be caught without coverage. Photo by Stephen Andrews on Unsplash

If you are in an artistic profession and thus pay pension, health, and nursing insurance through the Artist Social Insurance Fund (KSK), you should also advise them as well. If you’re leaving self-employment completely, you can typically give notice to KSK as to when it’s ending.

If you’re not, and intend to still make money freelancing as a side gig, they should know this as well. In this event, you’ll no longer pay health or care insurance through KSK, as this is covered through your main job.

You may need to continue to pay pension contributions through KSK based on the amount of money you still make from self-employed activities — depending on how much of them you continue.

KSK: How creative freelancers can pay less for German health insurance

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