Mastering the German Tax System: How To Pay Taxes And Get Money Back From the Tax Office

Expat Tax | International Student Tax in Germany | International Student Tax Return | Tax For International Students in Germany

Demystifying the German Tax System for International Students and International Graduates

As an international student in Germany, tackling the intricacies of the tax system can feel overwhelming. However, understanding and fulfilling your tax obligations is essential to ensure compliance and optimize your financial situation. A vast majority of international students need to work in order to finance their studies and living expenses. In this guide, we’ll take you through the step-by-step process of paying taxes in Germany while highlighting the benefits of innovative platforms like Taxfix and Wundertax. With the right approach and tools, it is easier than you may think.

Establishing Your Tax Residency

Determining your tax residency status is the first crucial step. If you reside in Germany for more than six months in a year, you are considered a tax resident and subject to German tax laws. Understanding this classification will help you navigate the tax system more effectively.

Obtaining Your Tax Identification Number

To engage with the German tax system, you need a tax identification number (Steueridentifikationsnummer). Obtaining this unique number from the Federal Central Tax Office is vital as it serves as your tax reference throughout your stay in Germany. Make sure to secure your tax identification number before undertaking any tax-related activities.

In most cases, the Tax Identification Number is automatically assigned to individuals by the Federal Central Tax Office (Bundeszentralamt für Steuern) shortly after registration with the local registration office (Einwohnermeldeamt). You can find this number on your payslips, income tax statements, or other official documents related to taxation.

Types of Income and Their Tax Implications

Familiarize yourself with the different types of income that may be relevant to you as an international student. This could include scholarships, grants, part-time jobs, internships, or freelance work. Each type of income carries specific tax implications, and understanding them will help you manage your taxes more efficiently.

Maximizing Deductions and Benefits

Germany offers various deductions and benefits that can reduce your tax liability.

As an international student, you may be eligible for deductions related to educational expenses, health insurance premiums, relocation costs, and more. Identifying and utilizing these deductions will help optimize your tax situation and potentially increase your refund.

Practical examples when you as a international student in Germany are eligible for a tax return:

  • Joined the Expatino Academy to help you to land a job? Tax return to up to 1.200€!
  • Bought a laptop or a mobile phone? You can expect a high tax refund!
  • Moved last year for work? You will most likely get a very high tax refund!
  • Worked less than 12 months last year? You will most likely get a very high tax refund!
  • Home-Office or +30min commute to work? You will most likely get a very high tax refund!
  • Participated in further education? You can expect a high tax refund!

Check the Wundertax website to access more practical cases and scenarios which may be eligible for you.

Tax Obligations for Expat Employees in Germany

If you work as an expat employee in Germany, your employer is responsible for deducting taxes from your salary. Your employer will calculate and withhold the appropriate taxes, including income tax and social security contributions, directly from your paycheck. This ensures that your taxes are paid throughout the year.

As an employee, you are still required to submit a tax declaration (Steuererklärung) to the tax office. This allows you to report any additional income, deductions, or benefits that may affect your tax liability. The tax declaration provides an opportunity to reconcile your actual tax situation, ensuring that you haven’t overpaid or underpaid throughout the year.

Where to Submit International Students Tax Return Documents in Germany

You can submit your tax declaration either online or by mail, through Elster (financial software from the tax office), or directly to your local tax office (Finanzamt). Now with Taxfix and Wundertax the entire process is digital. Tax documents will be created and sent to the responsible tax office in paperless form. Taxfix and Wundertax use the official ELSTER interface of the tax authorities for this.

The tax declaration is typically due by May 31st of the following year. However, extensions may be granted upon request. It’s important to keep a copy of your tax declaration and any supporting documents for your records.

Taxfix or Wundertax? What solution is better?

Both tax software providers have advantages:

Wundertax

  • Specialization: Wundertax focuses on tax returns for various specific situations, including freelancers, international students in Germany & expats
  • Affordable: Wundertax’s pricing is highly competitive, making it an attractive option for budget-conscious individuals

Taxfix

  • User-friendly interface: Taxfix offers a simple and intuitive user interface
  • Automation: Taxfix automates much of the tax preparation process, reducing the manual effort required
  • Mobile App: Taxfix is available as a mobile app, making it convenient for users to file taxes on the go

Conclusion

Mastering the German tax system as an international student in Germany is a valuable skill that ensures compliance and maximizes your financial well-being. By understanding your tax residency status, obtaining a tax identification number, identifying deductions and benefits, and leveraging user-friendly platforms like Taxfix and Wundertax, you can navigate the tax landscape with confidence. Remember that as an employee, your employer will handle the deduction and payment of taxes from your salary. However, it’s still necessary to submit a tax declaration to report additional information and ensure the accuracy of your tax situation. Stay organized, seek professional advice when needed, and fulfill your expat tax obligations to make the most of your experience in Germany.

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