Everyone that works in Germany has to give up a part of their salary. This may seem unfair, but it is used to finance the state, in order for everyone to benefit. After all, money for the social system must come from somewhere. For example, taxes finance social security and the infrastructure, making them an important prerequisite for the functioning of the entire economy.
Nevertheless, you can exercise your right and get a refund for taxes that you have overpaid. - with a tax return (Steuererklärung). Some are obliged to pay taxes, others are not. You can still file a tax return up to four years retroactively.
Mandatory assessment (Pflichtveranlagung): Who has to file a tax return (Steuererklärung)?
As mentioned above, income tax (Einkommensteuer) is deducted directly from an employee's wages. However, the tax levied may differ from the "actual" wage tax. In such cases, there is a compulsory assessment (Pflichtveranlagung). That means those affected are required to file a tax return (Steuererklärung).
Most of us never have more than one employer during the tax year, and we pay the salary tax (Lohnsteuer) directly each month. If this case applies to you, you are not required to file a tax return. But that is exactly when it is worthwhile for you to exercise your right and voluntarily submit a tax return to the tax office, as you can expect a refund (Steuererstattung). Especially if you were a high earner, had special or extraordinary expenses during the year.
Conditions that make you required to pay
You can't get an income tax return if:
- The tax office (Finanzamt) has entered a tax exemption (Freibetrag)
- Benefits (Sozialleistungen) that are subject to the proviso safeguarding progression (Progressionsvorbehalt) and amount to more than € 410
- in the case of separated spouses, the training allowance (Ausbildungsfreibetrag), disability or survivor's lump sum (Behinderten- or Hinterbliebenenpauschbetrag) for children is not divided 50/50
- several incomes were earned by several employers
- Compensation was paid by fifth method (Fünftelregelung)
- withholding taxable capital gains (abgeltungssteuerpflichtige Kapitalerträge) upon which no final withholding tax (Abgeltungsteuer) was paid
- Spouses selected tax group combination IV factor / IV factor or III / V (Steuerklassenkombination 4/4 mit Faktor or 3/5)
- Additional income over € 410
Additional income up to € 410 tax-free
Employees who receive income from non-self-employment do not have to pay any taxes on it, as long as the total of the additional income does not exceed € 410 per calendar year.
Normally, this makes € 410 an exemption limit (Freibetrag). Additional income in the amount of € 410 to € 820 are taxed at a reduced rate. The exemption limit (Freibetrag) is automatically taken into account by the respective tax office.
This does not apply to income such as unemployment benefits I (Arbeitslosengeld I) and capital gains (Kapitalerträge), from which credit institutions have already withheld withholding tax (Abgeltungsteuer).