Who must file a tax return?

If you live in Germany and had income that year, §25 (1) EStG obliges you to file a German income tax return.

 

The only exceptions are:

• you were an employee in tax class I or tax class IV without a factor, and had no other income except capital income in a German bank (which is taxed separately with Abgeltungsteuer), andno more than 410€ income (= profit) from all other sources, this includes benefits like Kurzarbeitergeld.

So if, for example, you wrote a newspaper article and were paid 450€ for this, and at the same time had 40€ in expenses researching that article, you had 410€ (= 450€ – 40€) of additional income, but you still do not have to do a tax return and declare it.

Of course, if you then go and voluntarily do a tax return, you will have to pay income tax on these additional 410€!

 

If you moved to/away from Germany that year, you always have to file a German income tax return, even if you were just an employee in tax class I or IV.

you had no other income except capital income and all your capital income (interest, dividends, profit from selling shares/funds/bonds, …) was earned in German banks and therefore already subjected to Abgeltungsteuer.

If, on the other hand, you had capital income in a non-German bank, no matter how little, you always have to submit a German income tax return. If your worldwide capital income was under 801€ you won’t end up owing any tax on it, but you still have to file.

Please note that calculating your capital income according to German rules is not as straightforward as you may think, for example, if you sold a financial asset (e.g. stocks or fund shares) in your US brokerage account, you can’t simply take the profit in USD and convert it into € with the exchange rate of the day of the sale.

You have to calculate:

profit in € = (selling price, converted into € using the exchange rate on the day that you sold the asset) – (purchase price, converted into € using the exchange rate on the day that you bought the asset)

So depending on how the exchange rate evolved, a loss in USD might turn out to be a profit in €, or vice versa!

Since this question has come up surprisingly often:

Money you get from your family is not taxable with income tax, so you do not have to file a German income tax return because of it.

Of course, if you received more than 400,000€ from a parent within the last 10 years, you will have to pay gift tax.

If you live in Germany, had German-sourced income and also non-German income, you will always have to file a German income tax return.

The only exception is if that non-German income was rental income from an EU/EEA country that has a progression clause aka Freistellungsklausel in their double taxation agreement (DTA) with Germany, which at the moment means all EU/EEA countries except Spain. 

 

If your rental income is from an EU country with a tax credit clause aka Anrechnungsklausel in the DTA, which at the moment means from Spain, you have to calculate your Spanish rental income according to German rules and tax it in your German tax return. You will in turn get a tax credit, i.e. your German income tax will get lowered by the Spanish income tax you already paid on it.