Tax Return as an Employee in Germany: Why It's Worth It

Your Employer Doesn’t Do Everything

Be honest: are you one of those people who think “My employer handles the tax stuff already”? You’re not alone. Around 14 million employees in Germany skip filing a voluntary tax return every year — leaving an average of €1,095 on the table.

Yes, your employer withholds payroll tax (Lohnsteuer) every month. But they calculate it using standard rates — without considering your personal expenses, commuting costs, or insurance payments. A tax return gets that money back.

Good to know: 88% of all employees who file a tax return get money back. The odds are clearly in your favour.

Mandatory vs. Voluntary Filing

Not everyone has to file a tax return. But everyone can — and for most people, it pays off.

You must file if:

• you and your partner have tax class combination III/V or IV with factor
• you had side income above €410 per year (e.g., rental income, freelancing)
• you received wage replacement benefits above €410 (Kurzarbeitergeld, Elterngeld, Krankengeld)
• you had multiple employers at the same time
• you had a tax-free allowance (Freibetrag) on your payroll tax card

Voluntary filing pays off if:

• your Werbungskosten (income-related expenses) exceed the €1,230 lump sum
• you want to claim Sonderausgaben like donations or church tax
• you had extraordinary expenses (medical costs, care costs)
• you started working mid-year
• you received a salary increase during the year

What You Can Deduct as an Employee

Your deductible expenses fall into three main categories. The more you can claim, the higher your refund.

Werbungskosten (Income-Related Expenses — Anlage N)

Werbungskosten are all expenses related to your job. The lump sum of €1,230 is applied automatically — only when your actual costs exceed this does itemizing pay off.

The key items:

• Commuter allowance (Pendlerpauschale) — €0.30/km (first 20 km) and €0.38/km (from km 21) for the one-way commute
• Home office flat rate — €6/day, max €1,260/year
• Work equipment — laptop, desk, office chair, software
• Professional development — seminars, online courses, professional literature
• Bank account fees — flat €16/year
• Union dues
• Job application costs

Quick example: You commute 25 km and work from home 3 days per week. Commuter allowance: (20 × €0.30 + 5 × €0.38) × 110 = €869. Home office: 110 × €6 = €660. Add bank fees (€16) and a new monitor (€350), and you reach €1,895 in Werbungskosten — that’s €665 above the lump sum.

Sonderausgaben (Special Expenses)

Sonderausgaben are private expenses that tax law still allows you to deduct:

• Church tax (Kirchensteuer) — fully deductible
• Donations — to charitable organisations with a donation receipt
• Retirement contributions — Riester pension, Rürup pension
• Health and care insurance — basic coverage
• First-degree education costs — up to €6,000/year

Extraordinary Expenses (Außergewöhnliche Belastungen)

Sometimes unexpected costs arise that the Finanzamt takes into account:

• Medical expenses — co-payments, glasses, dental work (minus a reasonable burden threshold)
• Care costs — for family members
• Funeral costs — if they exceed the estate value
• Divorce costs — legal costs in certain cases

Your First Tax Return — Step by Step

Never filed a tax return in Germany before? No worries. Here’s how to get started:

1. Gather your documents

You need your Lohnsteuerbescheinigung (annual payroll tax certificate — your employer sends it, usually in February), receipts for Werbungskosten, donation receipts, and insurance documents.

2. Choose your method

You can file via ELSTER (free, but clunky), a tax app like Restio, or a tax advisor (Steuerberater). For most employees, an app is more than enough.

3. Fill in the forms

As an employee, you typically need:

• Mantelbogen — personal details, Sonderausgaben, extraordinary expenses
• Anlage N — employment income and Werbungskosten
• Anlage Vorsorgeaufwand — insurance contributions

4. Submit

Electronically via ELSTER or directly from your tax app. Processing at the Finanzamt usually takes 4 to 8 weeks.

5. Check your tax assessment

When the Steuerbescheid (tax assessment) arrives, compare it with your filing. If there are discrepancies, you have one month to file an objection (Einspruch).

Deadlines You Need to Know

For mandatory filing:

• July 31 of the following year (so July 31, 2026 for the 2025 tax year)
• With a tax advisor: end of February of the year after that (February 28, 2027 for 2025)

For voluntary filing, you have much more time:

• 4 years retroactively — in 2026, you can still file for 2022, 2023, 2024, and 2025

Tip: Haven’t filed in previous years? Submit retroactively now. At an average of €1,095 per year, several thousand euros can add up quickly.

Common Mistakes That Cost You Money

• Not filing at all — the most expensive mistake. 14 million Germans give away money every year.
• Forgetting Werbungskosten — bank fees, union dues, application costs — small items add up.
• Not checking beyond the lump sum — Many think it’s not worth it with low Werbungskosten. But Sonderausgaben and extraordinary expenses come on top.
• Not keeping receipts — The Finanzamt can request documentation. Keep receipts at least until your assessment is final.
• Missing deadlines — For mandatory filings, late penalties start from the first month after the deadline.

How Restio Helps

As an employee, you don’t need to study tax law. Restio guides you through the entire process:

• Starter checklist — Restio walks you step by step through your first deductions and shows you which documents you need
• Scan receipts — photograph receipts and invoices throughout the year, Restio automatically detects the category
• Werbungskosten threshold — the Financial Watchdog shows you in real time whether you’re above the €1,230 lump sum
• AI tax expert — ask the Advisor “What can I deduct as an employee?” and get an instant assessment for your situation

Try Restio free for 14 days and find out how much refund you’ve been missing.

Conclusion

Your employer handles payroll tax — but not your tax return. And that’s where real money is. With an average refund of €1,095 and an 88% success rate, the voluntary tax return is one of the easiest ways to get more out of your salary. Start today — and if you’ve missed previous years, file retroactively. It’s almost always worth it.