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German Tax Return for Indian Employees: Complete Guide & Filing Process

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Financial Analyst

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Introduction

Indian professionals working in Germany—whether on deputation, EU Blue Card, work visa, or local employment—are required to comply with German income tax laws. While taxes are often deducted at source through payroll, many Indian employees are still required or encouraged to file a German Tax Return (Einkommensteuererklärung) to claim refunds, deductions, or comply with statutory obligations.

This SavingMantra guide explains who needs to file, documents required, and the step-by-step process for filing a German tax return for Indian employees.

Who Needs to File a German Tax Return?

Indian employees in Germany should file a tax return if:

  • They have multiple sources of income
  • They changed employers during the year
  • They received foreign income (India or other countries)
  • They want to claim tax refunds or deductions
  • They fall under Tax Class III, V, or VI
  • They received unemployment, maternity, or sick pay
  • They are self-employed or freelancers along with employment

Even if not mandatory, filing often results in tax refunds.

Tax Residency for Indian Employees in Germany

You are considered a German tax resident if:

  • You stay in Germany for more than 183 days, or
  • You have a permanent residence in Germany

German residents are taxed on worldwide income, subject to relief under the India–Germany Double Taxation Avoidance Agreement (DTAA).

Key Taxes Applicable in Germany

  • Income Tax (Einkommensteuer)
  • Solidarity Surcharge (Solidaritätszuschlag)
  • Church Tax (Kirchensteuer) – if applicable
  • Social Security Contributions (pension, health, unemployment, nursing care)

Step-by-Step Process for Filing German Tax Return

Step 1: Obtain Your Tax Identification Number (Steuer-ID)

Every taxpayer in Germany is issued a Steuerliche Identifikationsnummer (Steuer-ID).

  • Issued automatically after registration (Anmeldung)
  • Required for tax return filing and communication with tax authorities

Step 2: Collect Required Documents

Common documents required include:

  • Annual Salary Statement (Lohnsteuerbescheinigung)
  • Passport & residence permit
  • Steuer-ID
  • Bank account details (IBAN)
  • Rent agreement (for housing deductions)
  • Health insurance contribution details
  • Work-related expense receipts
  • Education or relocation expense proofs
  • Proof of foreign income (India)
  • DTAA-related documents (Form 10F equivalent, tax residency proof from India, if applicable)

Step 3: Identify Eligible Tax Deductions

Indian employees can claim deductions such as:

  • Work-related expenses (commuting, home office, laptop, internet)
  • Relocation costs
  • Professional training & certification fees
  • Health insurance contributions
  • Childcare expenses
  • Pension contributions
  • Double taxation relief under India–Germany DTAA

Step 4: Choose the Mode of Filing

You can file your tax return through:

1. ELSTER Portal (Official Method)

👉 https://www.elster.de/

  • Free government portal
  • German language
  • Requires registration & verification

2. Tax Filing Software

  • WISO Steuer
  • Taxfix
  • Smartsteuer

3. Tax Consultant (Steuerberater)

Recommended for:

  • Foreign income
  • DTAA claims
  • First-time filers

Step 5: File the Income Tax Return (Einkommensteuererklärung)

Fill in:

  • Personal details
  • Employment income
  • Deductions & allowances
  • Foreign income disclosures
  • Bank details for refunds

Submit the return electronically.

Step 6: Track Assessment & Respond to Queries

The German tax office (Finanzamt) may:

  • Ask for additional documents
  • Seek clarification
  • Issue a tax assessment notice (Steuerbescheid)

Respond promptly to avoid delays.

Step 7: Receive Tax Refund or Pay Additional Tax

  • Refunds are credited directly to your bank account
  • If tax is payable, payment must be made within the deadline mentioned in the notice

Deadlines for Filing German Tax Return

  • 31 July of the following year (self-filing)
  • 28/29 February of the second following year (if filed via tax consultant)

Late filing may attract penalties.

Double Taxation Relief for Indian Employees

Under the India–Germany DTAA:

  • Income taxed in Germany is generally exempt or credited in India
  • Proper disclosure in both countries is required
  • DTAA helps avoid paying tax twice on the same income

Professional advice is recommended for DTAA claims.

Conclusion

Filing a German tax return is an important compliance and financial planning step for Indian employees working in Germany. With correct documentation, understanding of deductions, and DTAA benefits, many taxpayers can significantly reduce their tax burden or receive refunds.

SavingMantra provides assistance with German tax return filing, DTAA advisory, foreign income disclosure, and cross-border tax compliance for Indian professionals.

Disclaimer

This blog is intended for general informational purposes only and does not constitute tax or legal advice. German tax laws, filing requirements, and DTAA provisions are subject to change. Readers are advised to consult a qualified tax advisor or Steuerberater before filing their tax return. SavingMantra is not responsible for any actions taken based on this information.

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