Germany’s personal income tax system is highly favorable to employees — the tax withheld from paychecks is typically higher than actual tax owed. Filing an annual return (Steuererklärung) to claim refunds returns an average of ~€1,000 per person. But many foreign residents in Germany don’t know this opportunity exists, or find the process too complex and give up. This article walks you through your first tax filing step by step.
Is Filing Mandatory or Optional?
Mandatory filing: Required if you have — multiple income sources (two jobs); freelance/side income (Nebenjob); changed jobs during the year; received government benefits (unemployment, parental allowance); or a special tax class (III or V).
Optional filing: If you have only one salaried job (tax class I), filing is voluntary — but strongly recommended, as a refund is almost certain.
Deadlines: Mandatory filers — July 31 (extendable to end of February the following year with a tax advisor). Voluntary filers — can backfile for the past 4 years.
Deductible Expenses (Werbungskosten)
This is the key to maximizing your refund:
Commuting costs (Entfernungspauschale): €0.30 per kilometer for one-way home-to-work distance, calculated across approximately 230 working days per year. A 20 km one-way commute generates €1,380 in deductions annually.
Home office (Homeoffice-Pauschale): €6 per day of remote work, capped at €1,260/year (210 days).
Professional development expenses: Course tuition, professional books, professional software subscriptions — all deductible.
Relocation costs: Job-related moving expenses qualify for a flat-rate deduction (approximately €886 in 2026).
Phone/computer costs: The portion used for work (typically 50–100% recognized) is deductible. Detailed deduction item list.
Tax Filing Tool Options
Elster (elster.de): Official German tax authority’s free tool. Comprehensive but complex interface — suitable for those with some financial background.
WISO Steuer: Most popular commercial tax software, has a Chinese-speaker community, guided data entry, ~€30, with a contingency fee option (percentage of refund).
Taxfix/Sorted: Mobile apps, very user-friendly for simple tax situations (salary income only), English interface, ~€40 — ideal for first-time foreign filers.
Tax advisor (Steuerberater): Recommended for complex situations (self-employment, significant investment income, multi-country income) — costs €100–500 but typically recovers significantly more in refunds.
Filing Process (Using WISO as Example)
1. Gather documents: pay stub summary (Lohnsteuerbescheinigung, sent by employer at year-end), commuting records, relevant expense receipts 2. Open software, follow guidance to enter personal information and tax year 3. Enter income (pay stub data can be imported directly via Elster) 4. Enter each deductible expense category 5. Software automatically calculates estimated refund/additional payment 6. Submit via Elster, await tax authority processing (typically 6–12 weeks) 7. Receive Steuerbescheid (tax assessment notice), verify amounts, refund automatically deposited to designated account
