Applying for Tax Returns in Germany

Applying for Tax Returns in Germany

Updated on Monday 14th September 2015

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Applying-for-Tax-Returns-in-Germany1Foreign citizens applying for tax returns in Germany

Foreign citizens moving to Germany in order to live and work there will become residents and thus will be required to pay taxes for the earnings they make. However, due to Germany’s extended double taxation agreements network, exemptions and deductions will apply. Germany does not levy any taxes on foreign source income. On the foreign source incomes list one can find salaries from work rendered abroad, incomes made from business activities carried outside Germany, income made from rental of properties abroad and capital gains from foreign real estate. Even if exempt from taxation, these incomes must be declared when filing the German tax returns. Foreign income from capital investments and dividends will be taxed, but at special tax rates.

What is the taxable income in Germany?

According to the German taxation system, the following incomes will be subject to taxation:

  • - income from agricultural activities,
  • - trade and business incomes,
  • - incomes earned from rendering professional services,
  • - salaries and pensions,
  • - capital investments,
  • - royalties and other capital gains,
  • - incomes made from German property rentals.
  • What are the time limits for submitting the tax returns in Germany?

In order to receive tax refunds, the tax return file must be submitted annually with the local finance office (Finanzamt) in Germany. The tax year in Germany corresponds to the calendar year and the deadline for applying for tax returns is the 31st of May, but the tax return date may be extended if the necessary documentation in prepared by an accountant. The tax assessment will usually take between three and six months and a notice will be sent to the person applying for the tax return. German employees that are levied the wage withholding tax are not required to apply the yearly tax return unless they have another income source that generates more than 410 euros. In case of employees, the German company must withhold the taxes and forward them to the local finance office on a monthly basis. Starting 2004, German companies must withhold salary taxes from employees’ wages paid outside the country if other salary taxes such as social security are supported by the national company.

For help with the appliance for tax returns or detailed information about the taxation system you can contact our law firm in Germany.