Expats moving to Germany often find filing their first German income tax return challenging or even overwhelming. The German tax system is complex, most information is only available in German, and many expats have cross-border tax issues that standard guidance simply doesn’t address.
Typically, expats are required to file a German income tax return. There are several options to achieve this and ensure full compliance with German tax law. Often, the best solutions depends on the personal situation and circumstances, the willingness and ability to deal with German language and tax law and personal preferences, including time and budget.
Option 1: Prepare Your Tax Return Yourself Using Tax Software
Several software solutions are available on the market. While software tools are predominantly in German language, some are also offering an English language version. The German tax office is also offering a free tool called ELSTER. A do-it-yourself software has certain advantages and disadvantages.
Advantages
- Low cost solution
- Convenient if you speak German
- Good if you enjoy managing your own finances
- May be suitable for uncomplex tax situations, e.g. if only straightforward employment income exist
Disadvantages
- Most software is designed for German taxpayers rather than expats
- International tax issues are often difficult to understand and not fully supported
- You remain responsible for any mistakes and may miss certain tax saving opportunities
- Limited support if your case becomes more complicated
Prinz.tax recommendation: If you only have employment income from a German employer, have only lived in Germany during the entire tax yeas and have no foreign income, a simple tax software may be all you need. As soon as your tax situation becomes international, tax software often reaches its limits.
Option 2: Hire a Local Tax Consultant
A local German tax advisor (Steuerberater) can prepare your tax return, communicate with the tax office and answer your questions. Often, local tax advisors offer in office consultations and are willing to accept your tax documents in hard copy. Many taxpayers appreciate meeting a personal tax consultant nearby.
Advantages
- Professional preparation of your tax return
- Individual advice and in office consultations
- Representation before the German tax office
- Good choice for typical German tax matters
Disadvantages
- Many local tax consultants prefer business clients rather than private clients
- Usually, tax consultants have a broad variety of German client but limited experience with expat tax issues
- Communication may only be available in German
- International tax optimization is often an exotic topic for local tax consultants
Prinz.tax recommendation: A local tax advisor is often an excellent choice if your tax affairs are mainly German with no international income and have a basic understanding of German language. Some expats prefer the experience of a walk-in office and meeting a professional tax consultant in person.
Option 3: Work with a Large International Tax and Accounting Firm
Large international accounting firms have specialist departments for international taxation and frequently advise multinational companies and their globally mobile employees.
Advantages
- Extensive international tax expertise
- Access to specialists in multiple countries
- Suitable for highly complex tax situations
- Strong support for corporate assignments, including tax equalization agreements
Disadvantages
- Often the most expensive option
- Focus is often on multinational corporations and not on private clients
- Processes can be more formal and less flexible
- Private clients are sometimes not accepted unless there is an existing tax consulting relationship with the employer or the employer provides tax support only during the initial phase of the assignment
Prinz.tax recommendation: If your employer has assigned you to Germany as part of a global mobility program expats may be required to use the services of their employer’s tax consulting firm for their private tax returns. In some cases, the employer’s support is limited to only one or two years of the assignment. It may be beneficial to continue the client relationship because the tax firm has the tax history on their files.
Option 4: Work with a Specialized Expat Tax Consultant
Some tax consultants focus exclusively on helping expats and internationally mobile individuals. Rather than serving every type of taxpayer, they specialize in cross-border tax matters or have a designated expat tax team.
Prinz.tax is a bilingual tax advisor, specialized in providing personalized tax advisory services for expats in Germany. Whether you’re relocating or managing cross-border income, our team is here to make the process stress-free. We are a client-focused, fully digital tax firm based in Germany, serving international clients globally with expertise in cross-border taxation and international tax treaties.
Advantages
- Specialist knowledge of cross-border taxation
- Experience with tax treaties and avoidance of double taxation
- Advice tailored to international employees and their families
- Personal service combined with international expertise with communication in English
Disadvantages
- More costly than using a do-it-yourself tax software
- May not be an option for international assignees subject to a tax equalization clause in their employment contract
- Digital and remote experience often does not give an option for in-person meetings
Prinz.tax recommendation: For expats living in Germany, choosing a tax consultant specialized in international and cross-border taxes is often the best option. Particularly if you have foreign income, international investments, employee share plans or expect to move abroad again, working with a specialist expat tax advisor can save considerable time, reduce tax risks and help avoid double taxation.
Which Tax Filing Option Is Best for Expats?
There is no single answer that fits everyone.
Simple employment income only with no international implications?
Tax software may be sufficient.
Mainly German tax matters but personal professional advice desired?
A local tax consultant can often be a good choice.
Complex international corporate assignment, potentially with tax equalization agreeement?
You may be required to file your tax return through your employer’s tax and accounting firm.
International income and cross-border tax situation as an expat?
A specialized expat tax consultant is often the most suitable solution because it combines international expertise with personal tax advice and a digital customer friendly customer journey.
At Prinz.tax, we support expats, freelancers, and employees with clear and accurate tax filing services. Our goal is to make the process simple and stress-free. From collecting your income statements and expense records to preparing forms and submitting them on time, our team handles every detail with care. By staying up to date with German tax law, we help you stay compliant, avoid mistakes, and claim all applicable deductions.
To find out which of your world wide income is taxable in Germany, check out this blog article!
