Einkommensteuervorauszahlung: All You Need to Know
The tax authorities want to collect taxes from everyone.
Professionally, it is only about money. After all, that’s why we go to work. Whether self-employed, freelancer or employee - the tax authorities want to collect taxes from everyone. For the self-employed and freelancers, however, there is a unique aspect: the advance payment of income tax (Einkommensteuervorauszahlung).
What is an income tax (Einkommensteuer)?
Income tax is a direct tax. In Germany, it is charged on the income of private individuals (natürliche Personen). Income tax as a community tax (Gemeinschaftsteuer) is the most important source of income for the state. In contrast to private individuals, companies have to pay the so-called corporation tax (Körperschaftsteuer).
In general, both income from self-employment and income from employment must be taxed in Germany. The basis for calculating the amount is laid out in the Income Tax Act (Einkommensteuergesetz - EStG).
Einkommensteuervorauszahlung für wen?
Der Staat möchte sicherstellen, dass seine steuerpflichtigen Bürger regelmäßig auf das laufende Einkommen Steuern zahlen. Aus diesem Grund erhebt der Staat regelmäßige Vorauszahlungen im Rahmen von Abschlagzahlungen auf die zu erwartende jährliche Steuerschuld und zwar in einem monatlichen oder vierteljährlichen Rhythmus. So soll verhindert werden, dass der Steuerpflichtige am Jahresende die Steuerlast auf einmal zahlen muss. Während Arbeitnehmer (Einkünfte aus nichtselbständiger Tätigkeit) im Rahmen der Lohnsteuer monatlich diese Vorauszahlung leisten, werden Vorauszahlungen für andere Einkommensarten vierteljährlich eingefordert.
Income tax prepayment (Einkommensteuervorauszahlung) for the self-employed and freelancers
In contrast to employees, who already pay income tax (Einkommensteuer) monthly via their employer, self-employed and freelancers have to make an advance payment (Einkommensteuervorauszahlung). The tax assessment notice (Steuerbescheid), in this case the advance payment notice (Vorauszahlungsbescheid), provides information on the amount of income tax. However, advance payments must be made by the time it reaches the letterbox. The amount of tax to be paid always depends on the income earned during the last assessment period (Veranlagungszeitraum).
If the tax office applies a tax burden (Steuerlast) that is too high, for example, because the income situation has changed, a reduction in income tax (Einkommensteuer) can be obtained from the tax office on application.
When does an advance income tax payment (Einkommensteuervorauszahlung) for self-employed and freelancers take effect?
In principle, an advance payment is only necessary if it is at least 400 euros per calendar year and at least 100 euros for an advance payment date. In general, costs such as special expenses (Sonderausgaben), income-related expenses (Werbungskosten), extraordinary charges (außergewöhnliche Belastungen), etc. are also taken into account when calculating income tax (Einkommensteuer). Subsequently, the advance payments are usually always made on 10.03., 10.06., 10.09. and 10.12..
Note: If the income is below the tax-free amount (Freibetrag) of 9,000 euros (as of 2018), no income tax (Einkommensteuer) is payable. It is irrelevant whether the income comes from self-employment or employment.