The German tax return — Steuererklärung — is something many expats avoid simply because it feels complicated. But here is the thing: for most employees in Germany, filing a voluntary tax return results in a refund. The average refund is around €1,000 per year. This guide explains who must file, who should file voluntarily, and how the system works.

Who Must File a Tax Return in Germany?

Certain groups are legally required to file a return each year. You must file if: you are self-employed or a freelancer, you have two simultaneous employers, you have additional income exceeding €410 per year (freelance work, rental income, investment income above the saver's allowance), you received wage replacement benefits such as Elterngeld (parental benefit), Kurzarbeitergeld (short-time work allowance), or Arbeitslosengeld (unemployment benefit), or you are in tax class III/V (typically married couples with different incomes) or IV/IV with the Faktorverfahren.

If you are a regular employee with one employer and no side income, you are not obligated to file. But you almost certainly should — more on that below.

Why You Should File Voluntarily (Even If You Do Not Have To)

Germany's payroll tax system (Lohnsteuer) deducts tax monthly based on estimates. The year-end return reconciles this with your actual income and allowable deductions. Common deductions that can generate a refund include: home office expenses, commuting costs (0.30€ per km, or 0.38€ from km 21), work equipment (laptop, tools, professional books), professional development costs, relocation expenses if job-related, and union membership fees. Most employees find that their actual tax liability is lower than what was withheld — hence the average €1,000 refund.

You have four years to file a voluntary return. So if you have been in Germany for a few years and never filed, you can still submit returns going back to the tax year four years prior.

The German Tax System, ELSTER, and Your Steuer-ID

Germany uses a progressive tax system. The basic tax-free allowance (Grundfreibetrag) for 2025 is €11,784 per year. Above that, rates start at around 14% and rise to 42% for higher incomes. The solidarity surcharge (Solidaritätszuschlag) now only applies to high earners (above approximately €73,000 per year). Church tax applies only if you are registered as a member of a German church (Catholic or Protestant).

Your Steuer-Identifikationsnummer (Steuer-ID) is an 11-digit tax number assigned automatically when you register in Germany. It appears on letters from the tax office (Finanzamt) and your payslips. Keep it safe — you need it for everything tax-related.

The official free tool for filing your return is ELSTER (elster.de), the German tax authority's online portal. It is comprehensive but can be technical. Many expats prefer third-party apps like WISO Steuer, Taxfix, or SteuerGo, which are available in English or guided formats and cost between €15 and €35. For complex situations (freelancer, multiple income sources), a Steuerberater (tax advisor) is worth the investment.

Deadlines: Mandatory filers have until 31 July of the following year (or 28 February if using a tax advisor). Voluntary filers have until 31 December of the fourth year following the tax year.

Taxes in Germany do not have to be a black box. If you need guidance on your tax situation, deductions you may be missing, or simply want someone to explain the system in plain language, Sylum can point you in the right direction. Visit sylum.de/contact to get started.