Cheating on taxes can be tempting. Especially when it comes to a few hundreds or sometimes thousands of euros. And especially if you are new in Germany and can always use an excuse that you don’t speak German or you are not familiar with the German tax laws and how they work. However, in any country „ignorance of law excuses no one”. The same applies, of course, to Germany as well. In this article, we will explain to you why it is not advisable to cheat while filling in your German tax return.
A few kilometres detour on the way to the office saves a lot of money. And 30-percent tips are quite normal during business trips. At least that’s what some want the tax office to believe. But those who exaggerate or even invent costs in their tax returns are skating on thin ice.
Some people collect receipts just like postcards. A receipt from a restaurant is kept as well as a car park card or a taxi bill. They could all be used in the next tax return. Often it is the self-employed who do this. Employees can, in any case, claim 1.000 Euro as a flat-rate sum for income-related expenses without the tax office asking for proof.
But if it can be foreseen that the actual costs will be higher, employees‘ sporting ambitions will also awaken in their tax returns. In an attempt to get more out of tax returns, people sometimes walk a fine line between lawful tax tricks and criminal tax fraud.
How does the tax office check?
First of all, if you file your tax return online or via Elster, you don’t need to expect a tax official to use a magnifying glass to look for errors. Tax returns are checked electronically for plausibility and usually waved through if no noticeable irregularities are detected. If, however, you suddenly claim high costs, for example, for running a double household or for further training, your tax return may be inspected more closely and the relevant supporting documents may be requested.
You will not be accused of bad intentions for simply transposing digits or incorrect transfers. In this case, just one phone call is enough to turn the questionable 155 kilometres into the regular 15. If, on the other hand, you have deliberately invented expenses, the tax office will, in the best case, simply ignore them when calculating the tax; in the worst case, a fine will be imposed on you. The excuse „I didn’t know that…“ or “I didn’t understand those German tax terms” won’t work here.
If you don’t know the tax rules, you need the help of experts. If the tax office suspects that you are hiding additional income, it can obtain more detailed information from banks and offices. But don’t worry about the immediate tax investigation. It usually comes into action only when the evaded sum amounts to a four-digit number.
Not every expense has to be documented
In the case of employees, the income-related expenses section is particularly suitable for generating costs. As long as the expenses seem plausible, the tax office does not investigate further. Which sums are accepted without further proof is determined by the regional tax offices (Oberfinanzdirektion) of each federal state in the so-called „limits that are not checked“ (Nichtaufriffsgrenzen).
For example, 16 Euro is usually accepted as an account management fee, even if you have a free current account. For work equipment such as work clothing, briefcases or specialised books, a non-objection limit of 100 to 150 Euro applies, depending on the federal state. But be careful: you have no legal claim that the tax office will accept the costs without checking them. You must submit supporting documents on request. And then it is difficult to cheat. If, for example, you try to declare holiday reading as specialised literature, it’s easy to find out. Using the ISBN, any tax official can find out which book you want to deduct.
Doing tricks: commuting to work
It is suspicious if you suddenly deduct significantly more and other amounts of your travel expenses to work than in the years before. This applies, for example, to the journey to and from work. For every kilometre of the distance between home and work, you can claim a commuting allowance (Pendlerpauschale) of 30 cents. This applies to a one-way trip per day and only to the days on which you actually go to work. For a five-day week, the tax office usually recognises 230 working days, for a six-day week – 280 days.
If you want to claim more days, you need confirmation from your employer. The length of the way to work is very popular for cheating. It should be clear to everyone that tax officials are also able to use route planners such as Google Maps. You don’t necessarily have to take the shortest route if there are faster or more convenient connections. But if you state 30 instead of 15 kilometres, you should have very good grounds for doing that.
Paid all by yourself? Trips and job applications
Vocational training is usually paid for by the employer, and business trips are paid in any case. A few thousand Euro for seminars, which you want to pay out of your own pocket, will certainly raise questions at the tax office. It is plausible, however, that you paid for travel and accommodation and that you had to pay extra for your meals. If you do not claim more than 250 Euro, the tax office will not necessarily want to see receipts.
In the case of applications, the tax office usually does not request every single receipt. The Cologne Tax Court considers a flat rate of 8.50 Euro for each application folder to be justifiable, for e-mail applications – 2.50 Euro. If, however, you also want to claim high travel costs incurred for job interviews, you should better have them confirmed by your potential employer.
Tax consultancy fees
Ideally, you should be able to prove your tax consultancy fees by submitting invoices. However, there are expenses that are equally related to income earning and the private sector, and it is difficult, if not impossible, to distinguish between the two. This applies in particular to expenses for tax literature, tax software or income tax assistance unions (Lohnsteuerhilfevereine).
For reasons of simplification, you can claim such mixed tax consultancy fees up to 100 Euro (non-objection limit) in full as income-related expenses or business expenses. As a rule, the tax consultancy fees are recognised by the tax office up to this amount without further examination. In the case of spouses who are assessed together, the amounts, unfortunately, are not doubled.
Receipts issued by yourself
In certain cases, you also have the option of issuing your own receipts. This is always the case if there is no receipt for a deductible expense, and if you have lost the relevant receipt. However, self-issued receipts are only common for small amounts such as tips or parking fees.
In addition to the type and amount of the expenditure, you also need to write down when, where and to whom you made the payment. If, on the other hand, you have lost your proof of purchase for a mobile phone used for professional purposes, the tax office may not be satisfied with just a self-filled in slip. In this case, it is helpful to prove the purchased item providing a bank statement or a credit card statement.