For English-speaking entrepreneurs residing in Germany, understanding the tax calendar is crucial for timely compliance and avoiding penalties. Here’s your guide to the key tax dates for 2024, focusing on the submission deadlines for tax returns and advance payments.
Tax Payment in a Nutshell
Typically, tax payments are due one month after the final tax assessment is distributed. For employment income and capital gains from domestic banks, taxes are deducted at the source. These deductions act as preliminary payments towards your overall income tax obligation. For additional income streams not covered by automatic withholding, taxpayers are often required to submit payments on a quarterly basis. The specific due dates for these payments fall on March 10, June 10, September 10, and December 10 annually.
For self-employed individuals, advance tax payments are necessary and should be calculated based on the previous year’s tax returns. In cases where a business is newly established, these payments are based on the business owner’s estimated earnings. These advance payments should be made according to the quarterly schedule provided.
Should I file my tax return? Voluntary vs. Mandatory
Voluntary Tax Returns
For many employees who only earn traditional wages and do not engage in freelance activities, filing a tax return is optional. However, submitting a voluntary tax return can be advantageous, as the average tax refund is around 1,095 Euros. This makes it beneficial for taxpayers to consider filing even when it is not required.
Mandatory Tax Returns
Certain conditions necessitate the filing of a tax return. These include:
Certain complex circumstances may also necessitate the filing of a mandatory tax return, which may not be straightforward to identify. In such instances, the tax office will notify you by letter, indicating your obligation to file.
Saving Taxes - Deductible Expenses
On a positive note, the German tax system allows you to deduct certain expenses from your due taxes and hence reduce your tax burden. As former German Chancellor Helmut Schmidt once stated: “Those who have the duty to pay taxes also have the right to save taxes.” Inspired by this principle, here are the 10 most significant deductible expenses that can help reduce your tax liability:
•Travel Expenses to your primary workplace.
•Bank Account Management Fees.
•Application Expenses for job seekers.
•Contributions to Statutory and Private Pension Insurance.
•Contributions to Health, Nursing Care, Liability, and Accident Insurance.
•Household-Related Services and Handyman Services.
•Relief Amount for Single Parents.
•Medication and Treatments that are medically necessary and not covered by health insurance.
These deductions are designed to alleviate the financial burden associated with these costs and encourage fiscal responsibility. What else can you deduct? Read more Extended Deadline for Income Tax Returns
The tax filing deadline for the assessment year 2023 has been extended. Typically, tax returns would need to be filed by July 31, 2024. However, for 2024, the deadline has been moved to September 2, 2024. This extension is due to the standard deadline of August 31 falling on a Saturday, thus shifting the final submission date to the next working day, Monday, September 2, 2024.
Handling Weekends and Public Holidays
German tax law accommodates for weekends and public holidays. If a tax deadline falls on a Saturday, Sunday, or public holiday, it is automatically extended to the next business day. This ensures that submissions received by the tax office by the end of the extended deadline are considered timely.
Late Submission Penalties
Failing to meet the tax submission deadline can lead to a late submission penalty fee (Verspätungszuschlag), as stipulated in §152 of the German Fiscal Code (AO).
VAT Filing Deadlines
Unlike income tax, VAT (Umsatzsteuer) is a self-assessed tax, meaning the business calculates the amount due. VAT returns are generally required to be submitted by the 10th day following the end of the reporting period (monthly or quarterly), known as the advance registration period. If the 10th falls on a weekend or public holiday, the deadline is moved to the next business day.
Example:
For monthly VAT filings, the deadline for February 2024 would typically be March 10, 2024. However, since this falls on a Sunday, the deadline is extended to Monday, March 11, 2024.
Requesting an Extension
Businesses can apply for a permanent extension, but this comes at a cost. An advance payment, equal to 1/11th of the previous year’s total VAT payments, is required. This payment will be offset against future liabilities.
Staying in touch with German authorities can be a time consuming and pain staking step, when freelancing in Germany. Our exterts at Richmond Blackwood support you with your filings and help you focus on your main operatiosn instead. Payment Grace Period
There’s a three-day grace period for tax payments (Schonfrist) following the due date, as per § 240 Abs. 3 AO. If the last day of the grace period falls on a weekend or public holiday, the deadline is extended to the subsequent business day.
Example:
For the VAT due in May 2024, the filing and payment deadline is June 10, 2024. If payment is made via bank transfer, the funds must be credited to the tax office’s account by June 13, 2024, considering the grace period.
Social Security Contribution Deadlines
Social security contributions for employees must be paid by the third-to-last bank working day of the month for which they are due. Timely payment is crucial, as any discrepancy discovered after the month’s end must be corrected by the third-to-last bank working day of the following month.
Summary
Keeping track of these deadlines is essential for all businesses operating in Germany, especially for English-speaking entrepreneurs who may not be familiar with the nuances of the German tax system. Proper planning and adherence to these deadlines ensure compliance and prevent unnecessary penalties. Always consider consulting with a tax professional to navigate the specifics of your tax obligations effectively.
