For Americans living in Germany, handling tax obligations can be complex since they must comply with both German and US tax laws. One key aspect of staying compliant is understanding the German tax deadline (Steuerfrist) and how it interacts with US tax requirements. Filing German taxes (Einkommensteuer) on time is essential, as it directly impacts your ability to claim the Foreign Tax Credit (FTC) on your US tax return. Below, we’ll outline the key German tax deadlines, how they affect US taxpayers abroad, and strategies for ensuring compliance with both systems.
Types of German Taxes
As an American expat living in Germany, you may be subject to several types of German taxes, including:
- Income Tax (Einkommensteuer): This applies to your worldwide income if you are a tax resident in Germany. Germany has a progressive tax rate ranging from 14% to 45%. Employees typically have tax withheld through the pay-as-you-earn system (Lohnsteuer), but freelancers and self-employed individuals must make estimated tax payments.
- Church Tax (Kirchensteuer): If you are a member of a recognized religious institution, you may be required to pay an additional 8% or 9% of your income tax as a church tax.
- Solidarity Surcharge (Solidaritätszuschlag): While this was largely phased out for most taxpayers in 2021, some higher earners still pay a 5.5% surcharge on their income tax.
- Trade Tax (Gewerbesteuer): If you run a business in Germany, you may owe trade tax. The rate varies by municipality but typically ranges from 7% to 17%.
- Value-Added Tax (Umsatzsteuer or Mehrwertsteuer, VAT): If you are self-employed or run a business, you may be required to collect and remit 19% VAT (or 7% for certain goods and services).
- Capital Gains Tax (Kapitalertragsteuer): Investment income, including dividends and stock sales, is subject to a flat 25% tax plus the solidarity surcharge.
- Property Tax (Grundsteuer): If you own real estate in Germany, you must pay property tax, which varies depending on the municipality.
- Inheritance and Gift Tax (Erbschaftsteuer und Schenkungsteuer): Inheritances and gifts above certain thresholds are subject to taxation, with rates ranging from 7% to 50%, depending on the relationship between the giver and recipient.
The German Tax Year and Deadlines
Germany follows a calendar tax year, meaning that the tax year (Steuerjahr) runs from January 1 to December 31. Taxpayers in Germany are required to file their tax returns by specific deadlines, depending on whether they file independently or through a tax professional.
Standard Tax Deadline
For those required to file a German tax return, the standard deadline is July 31 of the following year. This means:
- For the 2023 tax year, the filing deadline is July 31, 2024.
- For the 2024 tax year, the filing deadline is July 31, 2025.
Extended Deadline for Filers Using a Steuerberater (Tax Advisor)
If you work with a certified tax advisor (Steuerberater), you may benefit from an extended deadline. In this case, the deadline is February 28 of the second year following the tax year. This means:
- For the 2023 tax year, the extended deadline is February 28, 2025.
- For the 2024 tax year, the extended deadline is February 28, 2026.
Late Filing Penalties
Failing to file your German tax return on time can result in penalties. The German tax office (Finanzamt) may impose a late fee (Verspätungszuschlag) of 0.25% of the tax due per month, with a minimum penalty of €25 per month. Additional interest on unpaid taxes may also be charged.
Who Needs to File a German Tax Return?
Not all German residents must file an annual tax return. However, American expats in Germany may be required to file if they fall into certain categories:
- Self-employed individuals (Freiberufler or Gewerbetreibende)
- Employees with multiple sources of income
- Those who earn over €410 in untaxed income (e.g., rental income, foreign income)
- Married couples filing separately (Ehegatten-Splitting)
- Anyone claiming deductions, such as education expenses or work-related costs
Even if you are not required to file, you may choose to submit a voluntary tax return (freiwillige Steuererklärung) if you expect a refund.
Handling US and German Taxes as an American Expat
As a US citizen or green card holder living in Germany, you are required to file both a German tax return and a US tax return. However, the order in which you file is important to minimize your US tax liability.
Step 1: File Your German Taxes First
Since the US allows you to claim the Foreign Tax Credit (FTC) on foreign taxes paid, it is best to complete your German tax return first. The IRS Form 1116 (Foreign Tax Credit) requires proof of taxes paid to a foreign government, which means you need your German tax assessment (Steuerbescheid) before completing your US return.
Step 2: File Your US Taxes
After your German taxes are settled, you can file your US tax return using IRS Form 1040. You may need to file additional forms, including:
- FBAR (FinCEN Form 114) – If you have over $10,000 in foreign bank accounts
- Form 8938 (FATCA reporting) – If your foreign assets exceed certain thresholds
Step 3: Consider the US Tax Deadline Extensions
Americans living abroad automatically get a two-month extension, making their US tax deadline June 15 instead of April 15. However, if you need more time to file your German taxes before filing your US return, you can request an extension until October 15 by filing Form 4868.
Strategies for Avoiding Double Taxation
Germany and the US have a tax treaty to prevent double taxation. Key strategies to minimize tax burdens include:
- Claiming the Foreign Tax Credit (FTC): This allows you to offset US tax liability with German taxes paid.
- Using the Foreign Earned Income Exclusion (FEIE): If your income is below $126,500 (2024 limit), you can exclude it from US taxation.
- Understanding the US-Germany Tax Treaty: Certain income types, such as pensions and social security, are taxed differently in each country.
For Americans living in Germany, knowing the German tax deadline is essential for compliance and maximizing tax benefits. Filing your German taxes first allows you to claim the Foreign Tax Credit on your US return correctly. With expert tax guidance, you can meet deadlines, reduce your tax burden, and avoid penalties. Universal Tax Professionals is here to assist with your US tax obligations, and we’ve partnered with a German tax firm to provide support on the local side.
