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Tax Planning for Women: Tax Declaration in Germany


In 2019 tax declaration processes in Germany faced some changes. This reform is a great occasion to provide a couple of tips and bits of advice on how you can make the most out of your income tax return, if you’re living in Germany. Especially considering that writing investments and yields off against tax can be a brain teaser even for Natives, who often don’t know how to declare what in the forms.

What’s Changed in German Tax Declaration in 2019

First of all, since 2019, income tax declarations can be handed in until the end of July. Prior to that change, tax declaration had to be filed by May, 31st, latest. So, as of beginning of this year, deadlines for income tax returns have been delayed to July, 31st. In case, this date is still too early for you, you can file an application at your local revenue board providing a valid reason, requesting yet another deadline delay. Said application must be handed in by July, 31st, and, if granted, allows you to declare your income tax until September, 30th, at the latest. If you decide to leave your tax declaration to the hands of a professional, he might be granted yet a later deadline. So, from that point of view, income tax return done by a professional accountant, can pay off.

Hint: If deadlines for delay application or tax declaration are not met, you might face a fine of up to 10 % of your tax amount or 25000 Euros, respectively. Obviously, that fine will be added to the actual sum of your income tax.

The second change in the German tax declaration system, is a small, but essential one in the revenue code of German tax regulations. In 2019, § 137a came into force, which obliges any revenue board to change or repeal any tax declaration, in case you subsequently find spelling errors or transposed digits in the form.

Tips For Your Income Tax Declaration

Please note:
This article does not represent any form of legal advice. In case of questions, uncertainties, and legal tips on tax optimization, please consider consulting a trustworthy accountant.

Due to legal reasons, FinMarie may not offer counseling on tax planning for women and tax declarations. We can, and will, however, provide a couple of general tips on that topic, whatsoever.

Claim Expenses on Household-Related Services

The awfully bureaucratic term is called „haushaltsnahe Dienstleistungen“ in German, but what does it actually mean? It describes expenses you might have in case of repairs or maintenance works that had to be done in your house or apartment, and needed to be done by a craftsman. You can write up to 20 % of his invoice total off against tax. No matter, if you own a house or live in a rented flat and your landlord apportions his expenses for the craftsman among you and other tenants in the utilities statement.

Another asset declared a household-related service, which you can at least partially claim, might be the service charge you pay for a janitor or facility manager commissioned to maintain the building you live in. If you hire a cleaning service on a regular basis, these expenses, too, are considered haushaltsnahe Dienstleistungen and can be written off against tax.

Write Income-Related Expenses Off Against Tax

And yet another horribly bulky word … Meet the income-related expenses, or Werbungskosten, as they call it in tax-German. What these expenses include? For example, your home office space. Whether you’re a remote worker, a freelancer or simply granted a certain amount of hours per week to work from home by your employer, you can write up to 1250 Euros off against tax, if you own and use an office room at home, declaring it an income-related expense.

Same goes for office furniture or equipment, which you need to purchase yourself. If you spent no more than 500 Euros on occupational equipment, you may right these expenses off as Werbungskosten.

In some cases, even a relocation might be considered an income-related expense, and as such can be written off in your income tax declaration. These cases include, relocations for occupational reasons, and relocations that happen to bring you closer to your workplace, even if the original motive might not even have been that. If, by your change of location, the way to work lessens by at least an hour, these expenses are considered Werbungskosten.

Your Kids are Special Issuance Assets

This tax asset might especially interest you, if you’re a working mom, since you might write your child off against tax. Well, obviously not your kid per se, but you can claim refunds for its day care and clothing, for instance. In order to do so, you need to declare expenses for his or her (or their) clothes, kindergarten, nanny or au pair, and homework supervisor at your place so-called Sonderausgaben. For each of your children, the German tax law grants up to 4000 Euros of special issuance. Doing so, you can noticeably reduce your income tax.

How to Write Off Investments And Yields

You sure don’t want to miss out on this important asset among the Sonderausgaben or special issuances: your pension plan. Maybe you’ve already heard about the Riester-Rente, which several German companies and employers offer their employees. If you own such a contract, the FRG will return up to 2100 Euros to you. So, make sure to declare that asset, and provide your Riester provider with a written consent allowing him to forward your data to the revenue board. Only, if they have insight into these data, you can write your Riester contributions off against tax.

If in addition to the Riester-Rente you’ve made other provisions regarding your retirement savings – which you hopefully have -, maybe invested money in stocks, ETFs or even real estate, you can also write these yields off against tax. It’s just important that your yields and investment income do not sum up to more than 25 %. If you exceed these, settlement tax comes into effect.

So, you may well write interests on a building loan off as Werbungskosten, if you’ve bought a realty as capital investment. Just like fees for deposit management as a funds saver, stock or ETF savings plan owner, occurring sales charges when selling and buying bonds, and expenses for your portfolio management.

As soon as your income from your investments exceed the tax-free lump sum of 801 Euros stipulated for singles or 1602 Euros in case you’re married, however, you may no longer declare your expenses as income-related. Instead your liable to settlement tax. In 2018, regulations on the declaration of stock funds and ETFs have been subject to smaller changes. Since then, domestic and outlandish investments are taxed equally.

The good thing is that the bank that holds your deposit, does all that automatically. If you’ve submitted an exemption order for capital gains, the so-called Freistellungsauftrag, your bank automatically pays the respective revenue board the due Abgeltungssteuer (settlement tax), as soon as your investment gains exceed the annual lump sum.

An Example:

Let’s assume, you’re single and have gained 1500 Euros in yields and interests in one year. Subtracting the tax exempt amount of 801 Euros leaves you with a taxable 699 Euros. The settlement tax in this case would be 174,75 Euros. And with investments being subject to a Solidaritätszuschlag (solidarity surcharge) of 5,5 %, in this example 9,61 Euros, your assessed gain would result in 514,64 Euros.

For more on how to declare and write off your investments and capital assets on the income tax form in Germany, in order not to give away money, do not hesitate to contact our financial experts here at FinMarie. They are happy to help you with guidance on every aspect of investment possibilities and tax optimization in a free assessment call.

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Conclusion: Tax Planning for Women

In case you’re in risk of despairing of income tax formalities, rather turn to an adequate professional. In almost every bigger city in Germany, there are free-of-charge tax aid organizations (Steuerhilfevereine). If you prefer, chose an accountant. He sure knows which income and expenses you can write off against tax in what way and amount.

There are a lot of useful tools and pages on the internet, too. Especially, if you need help with the bureaucratic German on the tax declaration form. And eventually, there are tax softwares available, that often result as a great alternative in order to save money and gain confidence and orientation. For instance, these often provide info boxes and pop-ups with examples and advice on which income or expense needs to be filled in where in the tax declaration.

The important thing is: In order for you to benefit from all the deductible assets, you need proof of each and every one of your revenues and, even more, expenses. Receipts and invoices are great, but evidence on transactions, for instance kindergarten contributions, craftsmen billings, and workplace equipment payments, are even better.

For further tips by women for women, and information on finances, investments, and retirement planning, come back to our FinMarie blog – and, if you subscribe, we’ll even send every new blog post directly to your e-mail address.

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