Tax gap

The deadline is over and now the long wait begins. The coming weeks will play a big role in your everyday life. After all, you expect a substantial refund from the tax office, and you have plenty of reasons to do so. Considering the high income-related expenses, insurance premiums and household-related expenses that you have claimed, it would be very surprising if you didn’t receive a refund of at least 600€.

Moreover, your gut feeling seemed supported by our tax calculation tool, which accurately calculated the tax refund you were owed as soon as you entered the data. After entering your details, you may have even seen the handsome sum of 792€. That’s one more reason to submit the tax return as quickly as possible.

And then it happens: you receive your tax assessment and things you're disappointed, and perhaps even a little upset. The tax refund is much lower than you thought. This may have happened for several reasons.

You Forgot To Include All Relevant Information

Most of us have no time for tax returns, and even less desire to complete them. So we sit reluctantly in front of the computer and force ourselves to finally get it done. Lack of motivation often means that we are not devoting our full attention to the task at hand, so we’re likely to overlook essential items in our income tax return. That's why it always pays off to check two or three times that you have included all relevant information.

Make sure you include the following if applicable:

  • Special expenses (e.g. insurance)
  • Income-related expenses (e.g. business trips)
  • Household-related expenses (e.g. work carried out by tradespeople)
  • Exceptional expenses (e.g. medical expenses)
  • Double household expenses

Expenses Were Not Recognized

Not all expenses included in the tax return are necessarily recognized as such by the tax office. Although in many situations there is no room for debate, the scope of tax regulations may be much wider than what we’d normally expect.

For example, expenses arising from buying a suit for an office job may not be claimed for tax purposes, since the garment can also be used in private events. Tradespeople’s overalls are different and there’s no room for multiple interpretations here, since people are unlikely to wear this type of clothing in private events. This means that not every expense claim will be considered. However, our calculator tool always assumes the most favourable scenario, removing variation and ambiguity.

Lump Sum Allowance Was Not Recognized

Submitting documents to the relevant tax office in support of your lump sum allowance makes part of your income tax-free. Expenses that exceed the lump sum allowance can also be claimed for tax purposes. However, when total income is below the lump sum allowance, it will be automatically deducted from the taxable income.

The tax office is usually generous with lump sum allowances. However, there are items that are not automatically recognized. This mainly concerns expenses related work equipment, which are tax deductible up to 110€. The same applies to account management or telephone and Internet costs. Although these are not lump sums in the strict sense of the word, many tax officials will waive small amounts up to a certain limit.

Examples:

  • Account management fees up to 16 Euro
  • Work equipment up to 110 Euro
  • Telephone and Internet costs 240 Euro

If Expenses Are Not Recognized, Provide Supporting Documents

If for whatever reason, the lump sum allowance you claimed is not recognized by the tax office, you still have the opportunity to submit documents in support of your claim.

The Tax Assessment Notice Provides Useful Information

It’s important to keep a cool head even if you feel disappointed. Your tax assessment notice tells you why one or more items were not recognized.

Under the section entitled “Assessment", you will find detailed information about how your tax refund is calculated. Sometimes, this information can help clear things up and help you understand the decision better.

If this is not the case, you can contact your local tax office directly to ask for clarification. Tax officials are required to consider your request and answer your questions.

If Everything Else Fails

After you receive the tax assessment notice, you have 1 month to submit an appeal. You will also find this information towards the end of the official document.

According to Section § 122 AO, if you receive correspondence from the tax office on 1st June, the so-called "Disclosure of administrative act" automatically becomes effective on the third day after posting it (i.e. on 4th June).

According to Section § 109 AO, if this 3-day period falls on a weekend or a public holiday, the period is extended to the next working day. In the example above, that would be on 6th June. Consequently, you should submit an appeal by 6th June at the latest. Failing to meet this deadline would render the appeal invalid and the tax assessment would therefore be considered effective.

Particularities Of An Appeal

The tax office will check all the information submitted, and any mistakes in your favour will be rectified. If the tax office discovers errors that entail additional payments, it will issue a "Verböserung" (reformatio in peius). This allows you to withdraw your appeal, and the incorrect tax assessment will remain legally valid.

If your tax assessment is not what you expected, don’t let it upset you. It may be possible to address any discrepancies and things will look up once again.

We care about your data protection - by continuing to browse our website, you agree to our privacy policy.