What is tax deductible? A question that involves a lot more for the self-employed than for employees. Freelancers finally equip their own workplaces completely, work with their own devices and in their own or rented rooms. Entrepreneurs who fully disclose all business expenses in the tax return can significantly reduce their taxes.
For self-employed to be able to deduct their expenses, it is important to record and document all operational expenses. The motto is: Collect and organize receipts! Everything you want to deduct from the tax, you must prove. Not everything is immediately comprehensible for the employees of the tax office, because not every company is the same and the necessary equipment can vary widely. If the expenses mentioned by you seem strange to the tax office, you need to know how to justify them as necessary for your independence. And for things that you theoretically could also use privately, it must be provable that you need them mostly professionally. Otherwise it will not work with the withdrawal from the tax.
Depreciation: Not all business expenses are immediately included in the tax return for the year in which you made a purchase. Some you must write off over several years. This distributes the expenditure over a fixed period from the point of view of the tax office. The amortization period usually depends on the assumed useful life.
This way you can save taxes by writing off: there are depreciation tables for individual sectors. They specify the periods over which certain acquisitions are to be written off. In order to carry out the depreciation correctly, the purchase price must be divided by the number of depreciation years. In each year of depreciation, the corresponding share is then tax deducted.
Work equipment: In addition to office supplies, such as writing utensils, paper and folders, the tax-deductible work equipment also includes the company's technical equipment.
Study: If you use a room in your home for your freelance work, you can deduct the full cost of your study from your profit as a tax-deductible cost. This requires that you do not use the room privately. If the space is used both professionally and privately, then the share of occupational use is estimated. In addition to the proportionate room rent, the costs for your study also include purchases for the equipment of the room, such as curtains as well as the costs of renovation.
Car: Your company car is such a depreciation object. How you set it off also depends on how much you drive privately.
Bahncard: If you have saved so much by the BahnCard in the course of the year in the case of professional train journeys that the purchase was worthwhile, then it does not matter to the tax office whether you also used the card for private journeys.
Workwear: You need special work or protective clothing and always wear a jacket with a printed company logo on the customer? Occupational workwear can be tax deductible.
Incidental Business Costs: Use of your office and workspace incurs incidental business costs. You can deduct the operating costs in full. If your workroom or office is in your own flat, then usually no separate billing for the workspace by the landlord can be created. In this case you must calculate the operating costs proportionately. A meaningful proportion results from the area of your working space in relation to the total area of the apartment.
Office furniture: All furniture that you use to furnish your study and that serve to carry out your commercial activity can be taxed.
Computer: Not only Internet companies or online shops need computer equipment. As technology advances, businesses, businesses, tradespeople, and service providers all need computers and peripherals. Therefore, computers are also deductible for freelancers from the tax.
Coworking Space: You do coworking regularly because you do not have your own office? Or you use coworking spaces if you are on a business trip and want to find a place to work in a different city in an uncomplicated way. Then be sure to save all receipts over the paid days, weeks or hours.
Business trips: (French-fries) Pommes red and white at the motorway service area or a coffee in the on-board restaurant of the train: In the event of prolonged absence from one's own office, self-employed persons can be credited additional meal expenses in the tax return. Depending on the duration of the absence and whether it is domestic or foreign travel, lump sums apply. These are reduced if, for example, your client provides the food.
Printer: A printer is part of the standard office equipment. Every few years, a new acquisition is expected here. The tax office also sees it that way.
Own contribution: Under certain circumstances, the owner's contribution is tax deductible for landlords. In-house services include expenses incurred in the construction or expansion of a rented property. In-house services include the costs of materials as well as disposal and travel costs.
Energy costs: The electricity consumed as part of your self-employment is fully deductible. This is especially true for the electricity that comes from the activity and stay during working hours in your office or study. Who works in the home office and therefore can not create their own billing, must use its power consumption proportionally to sell it.
Bean counter, your inner: you should always have it with you when it comes to business expenses. He helps you to keep every receipt, to take off and make notes. He even sticks receipts and tickets printed on thermal paper to an A4 sheet of paper. Then he notes next to what the issue was, copies the page and staples both notes. He does that so that you have a readable version of the document if the original fades to spongy gray. All lovely guy, that inner bean counter! And maybe you already have the upgrade: Inner Bean Counter 4.0. The archives the same digitally.
Going out to eat: Anyone who goes out to eat with business partners for professional reasons can claim part of it for tax purposes. Make sure that the bill or cash receipt already correctly identifies the business lunch.
Textbooks: tax deductible. But if the titles do not explain why you are here for a professional purchase, just write a few lines to it. This will explain to the tax office why, for example, you need books on rhetoric or work organization as a computer scientist.
Travel costs: You can deduct the costs incurred for company journeys for tax purposes. You can also deduct your travel expenses if you travel by private car on business. If you use your car with a share of at least 10 percent also professionally, then you can deduct the actual cost of professional travel. For this you must collect the appropriate documents and keep them for presentation. On the other hand, if the car is only occasionally used for professional travel, then you can apply a mileage allowance of 30-euro cents per kilometer driven. You can also deduct travel expenses incurred for using public transport from the tax.
Flyer: The cost of printed materials you use, e.g. as product advertising or for information, of course, are business expenses.
Training: Freelancers who participate in further education or training can deduct the costs incurred for this from the tax. These include seminar fees, travel and accommodation expenses as well as additional meals.
Low-value assets (GWG): These are things that cost no more than 410 euros. You can write off such purchases immediately and in the year of purchase and payment. You do not have to, you can also use the depreciation periods. Example: You buy a rug for your professional office. He should keep 8 years according to the depreciation table. But now you have made a bargain: The net price is less than 410 euros. Then you do not have to distribute the depreciation over 8 years but can fully credit it in the year of acquisition.
Liability insurance: tax deductible.
IHK, Chamber of Commerce and Industry: Contributions to chambers, professional associations and interest groups are tax deductible.
Church tax is a special edition, albeit not operational. Special expenses lower the taxable income.
Logo: A designer has designed a company logo for you that now stands on your letterhead and the company nameplate. Of course, the fee for this service is an operating expense.
Rent for office space or pro rata rent for a study in a rented apartment: deductible!
Qualification: You can of course deduct amounts you pay for further training, additional qualifications, etc. from the tax.
Billing Software: Business Edition!
Writing utensils: Small cattle are also crap, they say. And so you should also keep receipts and bills from the discounters discounter. Every cardboard copy paper counts, as well as every highlighter and pad of sticky notes.
Telephone: If you use your (mobile) phone professionally and privately, make sure that you have individual proof of identity. Proofs over a few months, as the share is private / professional and set in the future according to percentages of your phone bills. Well justified, that should not be a problem.
Virus scanner: The software license that protects your professional computer from malware is an operating expense. The licenses for private PCs are not.
Kettle: The appliance in your home kitchen will not go through as an operating expense, even if you work in the home office. But if you buy a kettle for the tea kitchen of your company or your external office, then this is an operating expense.
Yoga Class: Private booked you cannot deduct the sports lessons from the tax, but maybe your health insurance will reimburse part of the expenditure.
Ornamental plants: What you purchase on plants especially for waiting rooms and company rooms or rent for a company party, you can note down as an operating expense.
Good news and bad news for expats living in Germany. The deadline for submitting the income tax declaration 2018 has been extended by two months. Deadline is now no longer the 31st of May, but the 31st of July.
But! anyone who forgets to declare the taxes 2018 in Germany will be taxed by the on a surcharge of 0.25 per cent of the fixed tax; at least you must pay 25 euros - per started month, in which the tax declaration is not yet available! So far, it was often still possible to talk to the responsible tax office. However, it will no longer be the financial officers who decides on the amount of any additional payments, and the process will be automated. That means: "From now on, the penalties are more sensitive and faster. In the worst case, the tax office can even order a penalty payment, an estimate as a late payment penalty for late tax payments and interest on overdue taxes.
Does it help if I declare my taxes earlier?
Yes, at least those who can expect a refund. The sooner the tax return is issued, the faster the notice usually comes. Because the tax offices work after receipt and usually take one to two months for the outcome. It should be even faster, if one makes his tax declaration on the electronic system Elster. The digital applications are treated preferentially by the authorities.
Do need assistance? We offer bilingual tax advice and solutions for freelancers and professionals from abroad who work in Germany and face daily challenges with the bureaucracy. Our services include expat tax registration, accounting, VAT, returns, reporting, declarations, as well as administrative support, correspondence with authorities and translations.
Steuermaus.com is designed as an alternative to the oversized, expensive, and not English speaking tax consultants in Germany. It gives small business owners, like freelancers and self-employed startups, who lack with the bureaucracy and German language access to an affordable bilingual service that empowers them and helps them grow.
As part of a review and based from our experience with our clients, we would like to draw attention to the fact currently the expat health insurance rules in Germany lead to misunderstandings. Most of you who have received a visa in Germany, know that it is mandatory to have a health insurance.
Many of you only want to go to Germany for 1 to 12 months and it is totally understandable to seek for the cheapest health insurance. Many often land at Mawista or other international insurance companies. That is basically okay, but those of you who want to stay longer in Germany, should know that Mawista and other health insurances in Germany are classified as travel insurance. These health insurances will be rejected by the foreigner’s authority (immigration office). It must be a so-called full health insurance.
So, ignorance does not protect against punishment, because the consequences of a rejection leads to extra effort and costs for you. First, you will have to arrange a new appointment with the authorities and then most of the full health insurances will ask for a medical checkup. It all costs unnecessary money.
Meanwhile, we have gathered a lot of experience with these cases, so we are happy to help you to check your health insurance status and to make changes if necessary. Notice, we are not a health insurance and we do not have any contracts or commissioned based agreements with health insurances. Our focus is expat tax services in Germany.
Expat freelancers in Germany cannot complain about the German Bureaucracy. They are experts in their field and must manage with a new country, system, culture and to top it all, also understand something about bookkeeping. Many use the service of a tax consultant, understandable, but not always useful. Firstly, tax accountants don’t work at a social rate. In addition, relevant business figures are often provided in the last minute. It pays to take this matter in your own hands.
So, we made a comparison test and took a closer look at three accounting software’s. The booking technique is sufficiently comfortable for all tested programs. In addition, all applications comply with the current tax regulations regarding the annual financial statements and the various tax reports.
Debitoor invoicing and accounting software is a clear, easy-to-use accounting cloud-based software for simplified profit determination. It is designed for freelancers and small business owners and invites your accountant to collaborate to make sure your business finances are always in order. It automates some of the most important accounting tasks, making it easier to stay on top of your finances. Automate your finances with automatic bank reconciliation, automatically matching transactions to invoices and expenses. Create instant reports to get an up-to-date overview of your business's finances. You can create VAT reports, Profit & Loss Statements and Balance Sheets with just one click. You can invoice anywhere, anytime and access your payments from your computer, tablet or phone. Debitoor is available on both Android and iOS, giving you all the tools, you need right in the palm of your hand. With prices starting at £4/€4 per month, Debitoor is designed to grow with your business. Debitoor invoicing software is localized to over 40 countries across Europe, Asia, Africa, Australasia, Latin America and Germany. No credit card required, you can cancel at any time and a 7 days trial period.
FastBill enables organizations to make excellent invoices, gather their costs and discuss better with their clients. FastBill was built with small businesses and entrepreneurs in mind. FastBill is an all-rounder when it comes to online billing. The tool not only has billing and customer administration in its luggage, but also shines through the project management, time tracking and various additional features such as the convenient online customer center. The usability of FastBill is also largely convincing (with a few exceptions). With the (quite expensive) premium version, the provider offers additional services that the FastBill team can use to help you with your bookkeeping. All in all: a very good offer!
FastBill costs between 10 and 100 euros per month, depending on the chosen tariff. The two cheaper STARTER and PRO versions are functionally based on each other, while the largest PREMIUM package includes additional features such as automation and the support of your accounting by employees of FastBill.
The smallest STARTER package already comes with unlimited invoices and receipts and otherwise offers all the necessary standard functions including invoice designers, document entry via mobile app as well as the reading out of vouchers through smart text recognition. Only the linkable bank accounts (only one) and the API requests with which you can partially automate your financial management (100 requests per hour) are limited in this package.
The larger PRO package adds some convenience features such as the online customer portal (see below) and the very important DATEV export. You can also link multiple bank accounts at once in this plan, and the limit on hourly API requests increases to 1,000. In addition, this tariff is designed for teams and offers 5 user access and access for your accountant.
In the customer database of FastBill you maintain all customer data and create individual customers in a clear list. You also assign individual projects to projects and recorded working hours and use the maintained data for creating and sending invoices and other documents.
What's great about FastBill is the integrated customer portal. In the PRO version, you can use this to grant your customers online access to the respective invoices, which allows them to track the status of the invoice or to comment on the document if necessary.
In addition to simple invoicing, FastBill also offers rudimentary project management and a time recording tool. Project-based companies and agencies can thus not only bill for previously created products and services, but also book recorded working times for individual projects and bill them directly with FastBill. Nice: The time tracking tool is prominently placed on the right edge of the screen so you can access it from any "place" in the software. Even employees who do not otherwise work with FastBill can use it as an easy-to-use timetracking tool.
The support of FastBill shines through accessibility. This allows you to communicate with the support team in a variety of channels. There is a telephone hotline as well as support via email or live chat. In addition, FastBill is represented on facebook and Twitter. The support times are standard: on weekdays from 9 to 17 o'clock in the usual business hours.
If you travel a lot or work with different devices, cloud-based accounting solutions like Debitoor or FastBill are best for you. Local installations are eliminated as well as regular updates. Both of these services include not only bookkeeping, but also order processing and online banking. They are are equipped with mobile document scanners and can be linked with partner solutions, for example for travel expenses. A monthly fee is paid. Compared to traditional accounting software, services are leaner and easier to use. Cloud bookkeeping is perfect when several people in different locations take care of the paperwork together. We can recommend both. It is only a matter of taste.
Tax Expert, Banker, Expat
Expat Freelancer Tax Serivce