Please note: Our German tax advisory services are provided by Sesch Group GmbH Wirtschaftsprüfungsgesellschaft, based in Eschborn, Germany.
For detailed information about our services in Germany, please visit taxrep.de.
Individual Income Tax Return
Individuals who are resident or ordinarily resident in Germany are generally subject to German income tax on their worldwide income. Nonresidents may be subject to German income tax on certain German-source income.
Whether an annual income tax return must be filed depends on the taxpayer’s sources of income and individual circumstances. Employees whose income consists solely of wages subject to German payroll tax are not always required to file a return. A filing obligation may nevertheless arise, for example, if the taxpayer received wages from more than one employer at the same time, received certain wage-replacement benefits, had particular combinations of tax classes or earned other income not subject to payroll withholding.
Where employment income is subject to payroll withholding, additional taxable income or income subject to the progression clause exceeding EUR 410 may trigger a filing obligation. Capital income from which German withholding tax has been properly deducted is generally not included in the income tax assessment unless an exception applies or the taxpayer requests an assessment.
Even where no filing obligation exists, submitting a voluntary income tax return may be beneficial, for example, where deductible employment expenses, special expenses, extraordinary expenses or tax credits result in a refund.
Corporate Income Tax Return
Corporations that are subject to German corporate income tax are generally required to file an annual corporate income tax return. This includes German corporations and, in certain circumstances, foreign corporations with German-source income or a permanent establishment in Germany.
The return is based on the entity’s annual financial statements and tax accounts. It includes the commercial result as well as adjustments required under German tax law, including non-deductible expenses, tax-exempt income, hidden profit distributions and other off-balance-sheet corrections.
Trade Tax Return
Businesses carrying on a commercial activity in Germany may be required to file an annual trade tax return. Corporations are generally deemed to carry on a commercial business by virtue of their legal form. Individuals and partnerships are subject to trade tax only to the extent that they conduct a commercial business; independent professional activities are generally not subject to trade tax.
The starting point for determining taxable trade income is generally the profit calculated for income tax or corporate income tax purposes. Statutory additions, deductions and any applicable allowances are then taken into account. The local municipality applies its assessment rate to the trade tax base amount determined by the tax office.
Value Added Tax Return
German value added tax is generally assessed on a calendar-year basis. Entrepreneurs are normally required to file an annual VAT return in which the VAT payable or refundable for the year is calculated.
In addition, periodic VAT advance returns may be required. The standard advance filing period is the calendar quarter. If the VAT payable for the preceding calendar year exceeded EUR 9,000, the calendar month is generally the filing period. If the preceding year’s VAT did not exceed EUR 2,000, the tax office may exempt the entrepreneur from filing advance returns and making advance payments.
Special rules may apply to newly established businesses, foreign businesses, reverse-charge transactions, intra-Community transactions and businesses using special VAT schemes.
Property Tax Returns
Since 1 January 2025, German property tax has been assessed under the reformed property tax rules. The assessment is generally based on property tax values or other assessment bases determined under the federal model or the applicable state legislation.
The main declarations required for the initial revaluation were based on the valuation date of 1 January 2022. Property owners may also have notification or filing obligations if relevant circumstances subsequently change, for example following a change in ownership, construction, demolition, a change in use or another material change affecting the property tax assessment. The applicable rules and deadlines may differ between the German states.
Inheritance and Gift Tax Returns
An acquisition that may be subject to German inheritance or gift tax generally must be reported in writing to the competent inheritance tax office within three months after the recipient becomes aware of the acquisition. In the case of a lifetime gift, the donor may also have a reporting obligation.
Statutory exceptions may apply, in particular where the acquisition is based on a testamentary disposition opened by a German court, German notary or German consul, or where a lifetime gift has been notarized. These exceptions do not apply in all cases. A separate notification may still be required, for example, where the inheritance includes foreign assets, real estate, business assets or certain interests in corporations.
The three-month notification is not necessarily the inheritance or gift tax return itself. After reviewing the reported acquisition, the tax office may request a formal inheritance or gift tax return and set a filing deadline of at least one month. The return must disclose the assets transferred, their values and the other information required to determine the taxable acquisition.
German inheritance or gift tax is generally assessed by the tax office through a tax assessment notice. In certain cases, however, the tax office may require the taxpayer to submit an official return containing a self-calculation of the tax. Where such a self-assessed return is expressly required, the calculated tax must generally be paid within one month after filing.
Cross-border inheritances and gifts may create reporting and tax obligations in more than one country. The result may depend on the residence, domicile and citizenship of the persons involved, the location and nature of the assets, previous gifts, available exemptions and any applicable tax treaty or foreign tax credit.
Frequently Asked Questions – German Tax Basics for U.S. Persons
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Yes. If you have a residence or regular stay in Germany, you are generally tax resident and may need to file a German income tax return depending on your situation.
If your presence exceeds 183 days in a year, tax residency may apply. Otherwise, Germany typically taxes only German-source income.
No. The U.S.–Germany Double Taxation Treaty coordinates taxing rights. Foreign tax credits or exemptions generally prevent double taxation.
Income Tax, Solidarity Surcharge, Church Tax (if applicable), Trade Tax (for businesses), Property Tax, and Inheritance/Gift Tax.
Both are progressive, but brackets and allowances differ. Germany also has separate mandatory social contributions alongside income tax.
Yes. U.S. citizens and Green Card holders must file annually with the IRS, reporting worldwide income, even when residing abroad.
The FEIE lets qualifying taxpayers exclude a portion of earned income for U.S. tax purposes. It does not affect your German tax calculation.
The FTC allows crediting German income taxes paid against your U.S. tax liability, subject to U.S. limitations.
Germany requires contributions to pension, health, unemployment, and long-term care. A U.S.–Germany totalization agreement coordinates coverage and avoids double contributions.
Only if you are registered as a member of certain religious communities. Otherwise, church tax does not apply.
Generally July 31 of the following year. With a tax advisor, an extended deadline to the end of February of the second following year may apply.
Annual wage statement (Lohnsteuerbescheinigung), investment and bank reports, insurance contributions, rental or business records, and proof of deductible expenses.
Most returns are filed electronically via ELSTER. Many filers use a tax advisor for cross-border issues.
Late filing can trigger penalties, interest, and assessments. Serious non-compliance can be prosecuted under German law.
Distributions may be taxable in Germany depending on treaty rules and account type. Contributions usually do not receive German tax deferral.
State pensions are generally taxable in Germany. The taxable portion depends on the year you start receiving benefits and increases over time.
Yes. FBAR (FinCEN 114) is required if thresholds are met. FATCA Form 8938 may also be required with your U.S. return.
Yes. Germany taxes German-source rental income. It must also be reported in the U.S.; the treaty and credits mitigate double taxation.
Germany imposes inheritance and gift tax based on residency and/or German-situs assets. U.S. estate and gift rules may separately apply.
Seek a tax advisor experienced in U.S.–German cross-border issues. For tailored assistance, please contact us.
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