WHAT IS A FLAT-RATE DEDUCTION (Pauschale)?
Flat-rate deductions (Pauschale) are accepted by your respective tax office without proof. A specific part of your income is mandated as tax-free. Expenses that exceed the flat-rate (Pauschale) can be deducted as well. However, if your income is below the flat-rate, then this is automatically deducted from your taxable income.
However, there isn’t just one flat-rate in German tax law, many areas are covered. There is a long-term care flat-rate (Pflegepauschbetrag), the advertising flat-rate (Werbungskostenpauschale) and much more. Which ones are the most important? You’ll find out now.
Did you buy a laptop or a mobile phone?
Did you move last year for work?
Did you work less than 12 months last year?
Was your work commute more than 30 minutes?
Are you married with tax class III/V?
Did you pursue a further education?
Did you receive self-employment income?
You are required to file a tax return.
Filing your tax return is worth it! You will most likely get a very high tax refund.
You can expect a high tax refund.
PROPORTIONAL TAX ALLOWANCE FOR ELDERLY RETIRED PERSONS (Altersentlastungsbetrag)
Pensioners that are older than 64 years old can lower their tax burden up to €1,900/year with the so-called proportional tax allowance for elderly retired persons (Altersentlastungsbetrag). The actual amount of the flat-rate (Pauschale) is dependent on the birth year of the pensioner. The tax office automatically calculates the amount of the proportional tax allowance for elderly retired persons (Altersentlastungsbetrag) for you.
Note: If you were born after Jan. 1, 1975, you will unfortunately not be able to profit from this.
CHILD ALLOWANCE (Kinderfreibetrag)
Parents can earn €7,356/year without having to pay taxes on this amount. Whether the children are biological or adopted or even if they’re foster children doesn’t play a role in this. The child allowance (Kinderfreibetrag) is meant to guarantee enough money for the upbringing of their charges.
The child allowance (Kinderfreibetrag) should not be confused with child benefits (Kindergeld). You can not claim both variations at the same time. Your respective tax office re-checks this every year to see which option is the best for the parents. This process is called the Günstigerprüfung.
LONG-TERM CARE FLAT-RATE (Pflegepauschbetrag)
Many people take care of a family member that cannot complete daily tasks without outside help. The government contributes to this support with a long-term care flat-rate (Pflegepauschbetrag).
Those that require this type of care can profit from up to €924/year. There are naturally some requirements that must be fulfilled:
- The person requiring long-term care must have a handicap ID (Behindertenausweis) with “H” mark or they must have long-term care level (Pflegegrad) 4 and 5
- The person in question is taken care of in their own home
- Service is not requested in return for long-term care
SAVERS’ FLAT-RATE (Sparerpauschbetrag)
The savers’ flat-rate (Sparerpauschbetrag) is especially interesting for those who put a few cents under their mattresses and save. Normally, €801 is tax-free for savers. The savers’ flat-rate (Sparerpauschbetrag) is €1,602 for married couples. This flat-rate (Pauschale) is automatically guaranteed by the tax office.
MOVING EXPENSES FLAT-RATE (Umzugskostenpauschale)
Everyone moves a few times in their country. If the move is due to relocation for a job or for professional reasons, a moving flat-rate (Umzugskostenpauschale) can be deducted from your taxes to offset moving expenses. The flat-rate (Pauschale) for married couples is €1,528 and €764 for singles since Feb. 2017.
Info: You are not required to provide receipts. The flat-rate (Pauschale) can only be claimed in Anlage N, on the second page.
COMMUTER FLAT-RATE (Entfernungspauschale)
More and more people are covering many kilometers on their way to work. Normally, everyone receives a commuter’s flat-rate (Entfernungspauschale) of €0.30/kilometer driven. However, those that have an e.g. 18 km drive to work should itemize their commuting costs in the “Advertising costs” (Werbungskosten) section, since the advertising cost flat-rate (Werbungskostenpauschale) of €1,000 is quickly exceeded for longer commuting distances.
Important: The flat-rate only applies to a one-way commute, that means not the trip to work and back.
ADVERTISING COST FLAT-RATE (Werbungskostenpauschale)
Apropos: The government guarantees employees a €1,000 flat-rate at the end of the year. This is an advertising cost flat-rate (Werbungskostenpauschale). This means that only the remaining annual income can be taxed. Therefore, it is normally advisable to complete an income tax declaration (Steuererklärung).
ADVERTISING COST FLAT-RATE FOR PENSIONERS (Werbungskostenpauschale für Rentner)
Even pensioners can benefit from an advertising cost flat-rate (Werbungskostenpauschale). However, this is much lower than that for employees. Only €102 is deducted annually for each pensioner.
ACCOMMODATIONS FLAT-RATE (Verpflegungsmehraufwand)
Employees have been able to deduct an accommodations flat-rate (Verpflegungsmehraufwand) since 2014. Those who are on the road for their work for longer than 8 hours have the right to deduct a flat-rate of €12. The €12 flat-rate can be deducted for the departure and arrival days. You can get €24 if you are on the road for work 24 hours or longer. Normally, the employee’s business trip costs are reimbursed directly from their employer.
HANDICAP FLAT-RATE (Behindertenpauschbetrag)
Normally, people that have a handicap are confronted with much higher costs for day-to-day living than a healthy person. Costs for medication, therapy etc. represents an unacceptable burden for them. Therefore, the government helps and guarantees a handicap flat-rate (Behindertenpauschbetrag) from €310 to €1,420.
The amount is dependent on the degree of disability (Grad der Behinderung). This is determined separately and individually. A medical opinion is required as well. The degree of disability that is assigned is adhered to on the income tax declaration (Steuererklärung).
STANDARD DEDUCTIONS FOR EXPENSES (Pauschale für Sonderausgaben)
Standard deductions (Sonderausgaben) for expenses are private costs that you are allowed to deduct from your income in order to save on taxes. This is divided into two groups: in long-term care flat-rate (Vorsorgeaufwendungen) and in “other” special expenses (andere Sonderausgaben).
Contributions for mandatory and private retirement provision (gesetzlichen und privaten Altersvorsorge), health and long-term care insurance contributions (Kranken- und Pflegeversicherungsbeiträge), donations (Spenden) et al. belong in this category. If no information about this is provided, then the government guarantees a flat-rate (Pauschale) of €36 for singles and €72 for married couples.