For many people in Germany, filing a tax return can feel like the end of a long administrative process when really it’s just the beginning.
Once a return reaches Germany's tax office (Finanzamt), it enters a system that combines automated checks with targeted human review.
In most cases, taxpayers will simply receive a tax assessment notice a few weeks later, but others may find their return attracts closer attention. This can lead to requests for documents, explanations or adjustments.
It’s hard to say exactly how the process works because the German tax authorities don’t publish detailed information about the rules or algorithms used by their risk management software.
But numerous tax and finance publications in Germany, from Finanztip to Guter Rat and Handelsblatt, have all identified patterns that appear to influence whether a return is processed routinely or examined more closely.
So, for anyone who has recently clicked "submit", here is what is likely happening behind the scenes.
An increasingly automated process
German tax offices use an automated Risk Management System that analyses information in tax returns and decides whether a case appears routine or requires further attention.
The software also cross-references the information you submit with other already available data. This can include information submitted directly by employers, pension providers, health insurers, certain online platforms and other institutions that are legally required to report information to the tax office.
Many routine returns are automatically processed within seconds, but a small proportion (approximately two to five percent) of these are selected for manual checks on a random basis. This means that even taxpayers with straightforward finances may occasionally face additional checks.
Where the system identifies potential risks, the return is passed to a tax officer for further examination. In practice, that can mean a much more detailed review of the information provided.
Importantly, this doesn’t mean a taxpayer has done anything wrong. In many cases, a flag simply reflects the fact that a claim is unusual, complex or differs significantly from previous years.
What is most likely to attract attention?
There is striking consistency across numerous publications regarding the types of claims that appear most likely to result in additional scrutiny.
One of the biggest themes is change. For example, a large increase in work-related expenses, unusually high deductions or the sudden appearance of a new category of expense may all prompt questions.
First-time claims appear to be another common trigger, including first-time rental income, first-time home-office claims, disability allowances, double-household arrangements and other deduction categories that haven’t appeared on previous returns.
Property-related claims are also identified as an area of interest, with the tax office thought to pay particular attention to new landlords, depreciation calculations, renovation costs and the distinction between different types of property expenses.
Working from home can bring valuable tax relief, but is also an area that appears to attract attention from the Finanzamt. This is partly because different rules apply depending on whether you have a dedicated home office or you're claiming the home-working allowance for days spent working from home.
According to Börse Online, tax offices look closely at whether home-office claims meet the relevant requirements and whether the number of home-working days reported is plausible.
Large donations, substantial medical expenses and other extraordinary burdens are also commonly cited as categories that may prompt closer review.
Similarly, unusually high work-related expenses, childcare costs and travel expenses are frequently mentioned.
Online platforms and digital income
Tax authorities now have access to information from platforms such as Airbnb, eBay, Vinted and Etsy under reporting rules that require platforms to provide certain user data. The tax assessment software is set up to flag any discrepancies with the information reported on a taxpayer's return.
Several sources also note increased attention to cryptocurrency gains, investment income and the offsetting of losses.
What happens next?
For most taxpayers, the next step will be receiving a tax assessment notice (Steuerbescheid).
Taxpayers generally receive a tax assessment around six to eight weeks after filing, although Steuern.de notes that delays of up to three months are possible when tax offices are dealing with high volumes of returns.
The tax assessment notice sets out how the tax office has calculated the taxpayer's liability and whether money is owed or will be refunded.
In straightforward cases, the assessment may largely match the original return. In other cases, the tax office may adjust certain figures or reject claims that it doesn’t believe have been sufficiently substantiated.
If questions arise during processing, taxpayers may also receive a request for supporting documents or additional explanations – which is why it’s so important to hold onto your receipts, invoices and other records.
In addition, some taxpayers may receive a provisional assessment (vorläufiger Steuerbescheid). Typically, this happens if a legal issue relevant to the return is still being considered by a higher court, such as the Federal Fiscal Court. In these cases, the tax office issues an assessment based on the current rules but leaves the disputed point open until a final ruling is made.
Taxpayers who believe the tax office has made an error can challenge the decision. This has to be done within one month of receiving the tax assessment notice.
Please note that this article provides general information and is not intended as tax advice. Readers with questions about their own return should seek advice from a qualified tax adviser or contact their local tax office directly.
