This process is regarding filing taxes in Germany as a freelancer (known as a “freiberufler” in German), and filing taxes as an employee of a company. I have my own small business, or in other words, I’m a freelancer. My wife is an employee of a company (not mine), so I will also cover how she files her taxes.
I believe you can file your taxes separately if you want, but my wife and I file together. So my wife and I have the same tax number (Steuernummer – this identifies the state in which you’re living and hence the finanzamt you’re assigned to; if you move to a different state you get a different number), but different tax ID numbers (Idnr. Stpfl – you have these for life) for each of us. Though we file online together, we fill out different forms.
I’ll preface all of this by saying I have no idea if this is the “correct” way of doing this, but it has worked for my wife and I for several years with no problems.
(Note for Americans: see this link about exemption for US/IRS taxes)
First, register at your local finanzamt
I first registered at my finanzamt in person. This is like a local branch of the German tax authority. I searched online for which finanzamt served the small town I was in, went in without an appointment, took a waiting number, and when called I told the person, “I must register as a freiberufler, please.” I wrote down that sentence in German on a piece of paper and read it out loud.
They gave me the right forms, I filled those out, and returned them a few days later. Note that I already had my German tax ID number, which I received as part of the process of getting a residence card.
Maybe a week later I received some papers in the mail with a common tax number for my wife and I, and separate tax ID numbers for each of us. Thus far, this is the registration process that gets you in the system; allows you to pay your taxes.
So at this point I went back to my local finanzamt to request the correct tax payment forms for a freelancer. They told me I couldn’t pay taxes as a freelancer on a paper form; I must do it online. They gave me a software CD to put in my computer. I couldn’t figure it out from the CD, but I eventually realized I could register to pay taxes as a freelancer online as well (no CD needed). This took maybe a week to do, because I needed to get some security registration information by mail, and use this to go online and generate a security key file that I could upload when logging in. All of the online tax stuff is done through a website called ELSTER.
So I successfully registered with ELSTER, first online, and then by confirming my identity by entering information I received in the mail (remember, in Germany you must always register your address at your local Rathaus, so the government always knows where you live). Upon successful registration on ELSTER I downloaded a security key file in .pfx format. Keep this file on your computer (you can copy it and move it to different computers), because you always need to upload this when you login to ELSTER online; they’ll use it to confirm your identity. Using this security key file is the “Zertifikatsdatei” method of securely logging in to ELSTER.
This “Zertifikatsdatei” method is just one of the ways you can securely login to ELSTER. I just checked the ELSTER website and it looks like you can login with your passport, a mobile phone, a USB stick, or an identity card with a chip in it. I don’t know about these other methods; they may be easier than the Zertifikatsdatei method.
Note: I started this process by going to my local finanzamt in person. Perhaps you could do everything online, but I’m not sure about that. If you’re not a freelancer – if you’re an employee of a company like my wife – I would guess you probably have to go through this finanzamt registration process too.
Login to your account on ELSTER and select the right forms to pay your taxes
At this point you should be able to login to ELSTER. Once you do, navigate to your home page and you should see somewhere that gives you an option to fill out the form: “Einkommensteuererklärung unbeschränkte Steuerpflicht – ESt 1 A.”
Einkommensteuererklärung unbeschränkte Steuerpflicht – ESt 1 A – This is the entire tax declaration. You’ll see it also referenced as “Einkommensteuererklärung,” or “ESt 1 A.” This contains all of the following sub-forms, which I’ll reference below as “forms.” Within this ESt 1 A, my wife and I fill out the following forms (me: freelancer/small business, wife:employee of a different company):
- Hauptvordruck (both)
- Anlage N: Einkünfte aus nichtselbständiger Arbeit (wife)
- Anlage S: Einkünfte aus selbständiger Arbeit (myself)
- Anlage Vorsorgeaufwand: Angaben zu Vorsorgeaufwendungen (wife, optional for myself)
- Einnahmenüberschussrechnung (myself)
I assume the following: if you’re single and an employee of a company then you need to fill out the forms my wife did. If you’re single and a freelancer then you need to fill out the forms I did.
A note on these forms: my wife and I don’t fill out most of the items in these forms because a lot of space is for things like special tax exemptions and situations like property tax deductions or capital gains declarations. Typically it seems the important stuff is towards the beginning of each form.
Hauptvordruck: This is the first form you’ll fill out. If you are married, both people fill this out together, and it will distinguish who-is-who by saying something like Person A and Person B.
I leave most of this form blank, only writing in my basic info like name, tax ID number, birthdate, date of marriage, and bank account information. The important stuff is all in the first few pages.
Remember about the religion question: if you say you are a member of a religion you have to pay extra taxes. Doing this has some advantages (you get buried in a good cemetery, your kids can go to a private religious school with a shorter waiting list, etc), but just make sure you don’t select this by accident. To say that you don’t want to pay a religion tax select, “nicht kirchensteuerpflichtig.”
The next dozen-or-so pages are pertinent if you have a lot of exemptions you want to claim: if you own property, have paid a lot for medical treatment, live on a pension, or things like that. If your situation is more complicated and you want to take advantage of every exemption then you may want to go to an accountant. But if your German language is decent and you’re feeling ambitious you can always try on your own. If you only have a few exemptions I think it’s doable yourself. My situation is relatively simple so I do it all myself.
You should also be careful if you are getting money from the government (kindergeld – child support – for example), because you probably must factor those in somewhere. I would guess though that whatever agency you get benefits from will send you a declaration at the end of the year that says how much you got and hopefully gives you some hints on which tax forms/sections you need to fill out.
Anlage N: Einkünfte aus nichtselbständiger Arbeit – This is the form my wife fills out to declare her income from being an employee. If you’re married, based on the information you provided in the first form (Hauptvordruck), this form’s title should include something to indicate whether it’s for Person A or Person B.
My wife’s job sends her all her tax information each year. She gets a monthly bus pass from her job, and they also tell her where on this form to enter the yearly value for the bus pass (yes, you must pay taxes on that). Out of 18 different sections on this form, she only fills out three. Some places on this form even reference the line item they need from the tax documents my wife gets from her job.
Anlage S: Einkünfte aus selbständiger Arbeit – This is the form for freelancers (myself). It covers business profits and expenses. If you’re married, based on the information you provided in the first form (Hauptvordruck), this form’s title should include something to indicate whether it’s for Person A or Person B.
There are a lot of business exemptions and situations (capital gain taxes, etc) you can claim/must declare if you’re in a more complicated business situation. The only thing I include in this form is my professional title and total income.
Anlage Vorsorgeaufwand: Angaben zu Vorsorgeaufwendungen – This is the form where my wife writes in the information about her health insurance and pension. She references the tax information her employer sends her. I have my own private health insurance that I pay about 30 euros per month for. I could deduct this here but I don’t, hence my wife is the only person who deals with this form. There is a place within this form where you can specify information for Person A or Person B.
Einnahmenüberschussrechnung – This is basically a form where you tell how you calculated your business/freelancer profits. It seems that as of the 2017 tax period this is required. I use the Anlage EUR form. Again I don’t fill in most part of this, just the first two parts with basic info, and the top of the third part where I say I don’t have any business expenses.
In the basic info sections I specify that I’m an “Angehorig der freien Berufe” — a freelancer — and that regarding the VAT tax (Mehrwertsteuer (MwSt)) my status is “umsatzsteuerlicher Kleinunternehmer” — small business tax classification. As of this writing, if you fill in this status I believe you are not required to pay VAT tax if you make less than 17,500 euros.
Finished: submit your taxes
Once you’ve completed these forms makes sure you’ve saved them all (hit the “speichern” button). Look on your ELSTER account for something that says “prüfen;” this will get you to the screen where you can look over all the information you’ve written and check to make sure it’s accurate. You won’t be able to advance to the “prüfen” part if any of your forms have errors. If there are errors you will see them come up on the left sidebar, and you can follow the links to fix them. Once you’ve proofed everything on the “prüfen” page you can confirm this and find the “absenden” option to send in your taxes and you’re done!
Fortunately if your taxes don’t change much from year-to-year, you’ll be able to auto-populate next year’s tax forms with the info you’ve submitted for this year and save yourself a lot of copy-and-paste translating.
Congratulations, you’ve just engaged in one of the purest civic duties!