Formalities in Taxation / Tax Returns
This page will introduce to you what general formalities you will encounter and have to deal with when it comes to your taxation.
When / how does someone get a social security card?
The social security card is sort of like an ID card to show that you are insured under the statutory pension system. You are required to show this card to your employer. Certain professions or jobs are required to always be able to present it. Such will be either professions on construction sites or stands at fairs. If you do not yet have one, your employer will automatically apply for one for you as soon as he registers you at a (statutory) health insurance company (gesetzliche Krankenversicherung). The health insurance company receives and manages all social security payments (statutory unemployed insurance (Arbeitslosenversicherung), old-age pension (Rentenversicherung), health and nursing insurance (Krankenversicherung, Pflegeversicherung). N.B. this is only relevant for those insured on the statutory system. If you are self-employed e.g. then you do not need one – you are mandatorily insured inside the statutory scheme.
When do I need a tax card? Where do I get it?
Starting 2011, you will not get a wage tax card ("Lohnsteuerkarte") anymore! The German government has implemented another measurement in eGovernment: no more paper tax cards. The official intention is to significantly simplify and speed up the communication between tax office and businesses.
What do I have to now give my employer instead of my tax card for my working papers?
You will now only have to identify yourself as such. Your employer will ask you for your date of birth and tax identification number (steuerliche Identifikationsnummer [IdNr.]) and whether this is your main or secondary employment. And that is it. After registering your physical address (“polizeiliche Anmeldung”) in Germany, you will automatically get a letter from a federal tax office (Bundeszentralamt für Steuern) issuing you a personal ID-Nr. that is valid for you individually. Your personal details will be stored in a database of the tax administration and the employers will be supplied with them electronically.
Well, I would have no problem to supply my employer with my tax IdentNo but I didn't get one. Where do I apply for such number?
Normally, you will find it on your last tax assessment. When you have not worked or lost your number or such records then you will have to apply to get your number again. This can be done online at the Bundeszentralamt für Steuern – click here. Please keep patient, as due to manifold enquiries, this will take some time. Keep in mind, not to request with your tax number (12/123/123456) but your tax IdentNr. (which consists exclusively of digits). This is a personal identification number for exclusively you. It will never changed – regardless whether you marry, divorce or even die.
When and how do I now, not having a paper wage tax card, make changes?
Previously, you were obligated to have changes made into the tax card as soon as possible whenever the situation changed during the year (§39 IV EStG) – but at the latest in November of any year for that year and following years. Such incidents can be e.g. marriage, the birth of a child, or when contribution to assistance for single parents (§24b EStG). Now these changes will be automatically taken care of when you report these details to the vital office (Standesamt).
Just exactly how am I to declare the taxable income?
You must use the mandatory forms, which are available at your local fiscal authority. The fastest thing is to pick it up by yourself. Due to financial restraints, the Finanzamt will mail you the forms only if you send them postage for a large letter or transfer this amount to their account (to cover postage). However, German offices really go with the times and most forms are available in the internet. Check out https://www.elster.de/arbeitn_home.php – N.B. this is exclusively available in German!
What does my tax advisor or attorney need for preparing my tax return? How am I to prepare the documentation? When do I hand them in to him?
The first thing he needs to have is your electronic wage tax certificate (Ausdruck der elektronischen Lohnsteuerbescheinigung), a “Steuerbescheinigung” of your bank on any capital income (savings, shares, dividends, etc.) must always be handed in. Receipts of your expenses are only needed if you have work related expenses of more than € 1000. Hand all your papers to your tax accountant as soon as you have them together. Tax return is due within one after a tax year has ended. This simply means that your tax return for 2015 will be due within 2016. N.B. If you are expecting money back: first come first serve.
Who is allowed to professionally file tax returns?
Generally, you can declare your taxes yourself. To accomplish this yourself you will need a solid command of German. In terms of taxation, even many Germans lack this ability. However, it might be a good idea to consult an attorney or a tax adviser (= Steuerberater). Your embassy will have a list of attorneys and tax advisers who will be able to help you in your mother tongue.
What is the difference between a "tax consultant (Steuerberater)" and an attorney for professionally filing tax returns?
It starts with their individual education. Tax consultants typically have studied economics with a major in tax law. An attorney has studied law. Nevertheless, both have learned to file cases in court. For the private person there is not a real difference in their qualifications. For freelancers or companies, the main difference will being able to evaluate economic results. Some attorneys have the double qualification of also being a Steuerberater – and vice versa. And some such professionals are also competent to deal with a foreign taxation. As a rule of the thumb, the more qualifications such professional has the more he will want to bill. Also you will find abbreviations like FAfStR or spelled out Fachanwalt für Steuerrecht. Such an attorney has passed several tests to qualify as a specialist in taxation matters.
What are tax classes?
For the purpose of taxation, people are separated into classes. Social ranking has nothing to do with tax classes. A high brow academic as well as an outright idiot can wind up having the same tax class (Steuerklasse). Each class has different prerequisites and levels of taxation.
- Class I is for singles (= divorced, widowed) or married couples living separated (= not cohabiting).
- Class II is for singles or married couples living separately and have at least one child.
- Class III is for married couples living together and one spouse is not working or one spouse is in class V.
- Class IV is for married couples, whereas both persons are employed and live together.
- Class V is for married couples, both persons are employed and live together, whereas one spouse has class III.
- Class VI is for employees working for a second employer. You will wind up here automatically when applying for a second tax card – no matter which class is connected to your first card.
Which tax class is best?
Does not much matter, because you can choose your class only if you are married, you and your spouse are employed, and you live together. As a rule of thumb, if one spouse earns 60% of the joint income, it is advantageous to combine Classes III and IV. Otherwise, both persons land in Class IV. Consult your attorney or tax adviser for detailed advice.
I just got my tax assessment back. They want € 100,000 from me but I only earned € 24,000. What am I to do about a wrong tax assessment?
React! You have one month time to appeal after you have received it. This work should be entrusted to an attorney or tax adviser! If you have done your taxes alone, then you must appeal in writing to your tax office. Just write a letter with this wording: “Hiermit erhebe ich Einspruch gegen den Steuerbescheid über [tax kind] vom [date]. (I herewith appeal the tax assessment on [tax kind] of [date].” This will give you a break to contact a professional.
What happens if I miss the month?
Then you generally cannot appeal the assessment and have it tested anymore. Passing the deadline means time is over. However, there is an exception if you were without fault hindered to submit your appeal on time. Such a hindrance could be hospitalization for some time. Best would be to contact your attorney or tax adviser – ASAP.
Oh, by the way, what is a tax assessment?
Untechnically speaking, an assessment is your tax bill. Your assessment can be used as a proof of income. So always keep this document safe!