Year-End Tax Preparation for Freelancers: What You Need to Know

As the year comes to an end, it’s time to prepare for tax season. This guide will help you organize your documents, understand deadlines, and ensure you’re ready to file your tax return as a freelancer in Germany.

Important Deadlines

Income Tax Return (Einkommensteuererklärung)

Standard deadline:

• July 31st of the following year (for the previous year’s taxes)
• Example: 2024 taxes due by July 31, 2025

Extended deadline:

• December 31st if you use a tax advisor (Steuerberater)
• Automatic extension when working with a professional

Late filing penalties:

• 0.25% of tax due per month (minimum 25 EUR)
• Can add up quickly, so file on time

VAT Returns (Umsatzsteuer-Voranmeldung)

If you’re registered for VAT:

• Monthly or quarterly returns continue as normal
• Final annual return may be required
• Check with your tax office for specific requirements

Documents You Need to Gather

Income Documents

All sources of income:

• All invoices you sent (even if not yet paid)
• Bank statements showing income received
• Payment confirmations from clients
• Records of any other income sources

Organization tips:

• Sort by date or client
• Create a summary spreadsheet
• Total all income for the year

Expense Documents

Business expenses:

• All receipts and invoices for business purchases
• Office supplies and equipment
• Software subscriptions
• Professional services (accountants, lawyers, etc.)
• Travel and transportation receipts
• Marketing and advertising costs
• Insurance premiums
• Bank fees and financial services

Home office expenses:

• Rent or mortgage statements
• Utility bills
• Home office calculation (if using actual costs method)

Professional development:

• Course and training receipts
• Conference and workshop fees
• Professional membership fees
• Educational materials

Tax Documents

From tax office:

• Previous year’s tax assessment (Steuerbescheid)
• Any correspondence from Finanzamt
• VAT registration documents (if applicable)

From other sources:

• Health insurance statements
• Pension contribution statements
• Any other tax-related documents

Organizing Your Records

Digital Organization

Recommended structure:

Tax Year 2024/
  ├── Income/
  │   ├── Invoices/
  │   └── Bank Statements/
  ├── Expenses/
  │   ├── Office/
  │   ├── Travel/
  │   ├── Software/
  │   └── Professional Services/
  └── Tax Documents/

Tools to use:

• Accounting software (Solobooks)
• Cloud storage (Google Drive, Dropbox)
• Spreadsheet software (Excel, Google Sheets)

Physical Organization

If you prefer paper:

• Use labeled folders
• Organize by category
• Keep in a secure, fireproof location
• Consider scanning important documents

Common Deductions to Review

Office Expenses

• Home office deduction (1,250 EUR pauschale or actual costs)
• Office furniture and equipment
• Office supplies
• Internet and phone (business portion)

Technology

• Computers and software
• Cloud services and hosting
• Accounting software subscriptions
• Professional tools and apps

Professional Services

• Tax advisor fees
• Legal fees (business-related)
• Accounting services
• Business coaching or consulting

Travel and Transportation

• Business travel expenses
• Local transportation for client meetings
• Car expenses (if used for business)
• Parking and toll fees

Marketing and Advertising

• Website costs
• Online advertising
• Business cards and printed materials
• Photography and design services

Insurance

• Professional liability insurance
• Business equipment insurance
• Health insurance (if self-employed)

Pre-Year-End Tax Planning

Before December 31st

Consider these strategies:

1. Make planned purchases
   • Buy needed equipment before year-end
   • Prepay subscriptions for next year
   • Stock up on office supplies
2. Maximize deductions
   • Review all potential deductions
   • Make charitable donations
   • Pay professional fees
3. Organize records
   • Start gathering documents early
   • Don’t wait until tax season
   • Use accounting software throughout the year
4. Consult a tax advisor
   • Get advice on year-end strategies
   • Plan for next year
   • Ensure you’re maximizing deductions

Using a Tax Advisor

When to Use One

Consider hiring a tax advisor if:

• Your income exceeds 50,000 EUR
• You have complex business structures
• You’re unsure about deductions
• You want to maximize tax savings
• You’ve had significant changes during the year

Benefits

Advantages:

• Expert knowledge of tax law
• Maximize your deductions
• Avoid mistakes and penalties
• Save time and stress
• Automatic deadline extension

Costs:

• Typically 200-500 EUR for simple returns
• More for complex situations
• Often worth it for peace of mind

Filing Your Tax Return

Options

1. Do it yourself (ELSTER)

• Free online platform
• Step-by-step guidance
• Suitable for simple situations
• Requires time and attention to detail

2. Use tax software

• Commercial tax software
• Guided process
• Automatic calculations
• Cost: 20-50 EUR

3. Hire a tax advisor

• Professional preparation
• Maximum deductions
• Handles all communication with tax office
• Cost: 200-500 EUR+

What to Include

Income section:

• Total business income
• Other income sources
• All income must be reported

Expense section:

• All business expenses by category
• Home office deduction
• Depreciation on equipment
• Professional fees

Other sections:

• Health insurance
• Pension contributions
• Other deductions

Common Mistakes to Avoid

Waiting until the last minute

• Start early
• Gather documents throughout the year
• Don’t rush the process

Missing deductions

• Review all expense categories
• Don’t forget small expenses
• Keep detailed records

Incorrect calculations

• Double-check all numbers
• Use accounting software
• Have someone review if unsure

Not keeping receipts

• Keep all receipts organized
• Digital receipts are acceptable
• Store for 10 years

Missing deadlines

• Set reminders
• Mark calendar
• Consider using a tax advisor for automatic extension

After Filing

What to Expect

Processing time:

• Usually 2-4 months
• Can be longer for complex returns
• You’ll receive a tax assessment (Steuerbescheid)

Possible outcomes:

• Refund: If you overpaid during the year
• Payment due: If you underpaid
• No change: If calculations were accurate

If You Receive a Refund

• Usually processed within a few weeks
• Paid to your registered bank account
• Check your tax assessment for details

If You Owe Tax

• Payment deadline specified in assessment
• Usually 30 days from receipt
• Pay on time to avoid penalties
• Consider setting up payment plan if needed

Tips for Next Year

Start early:

• Keep records organized throughout the year
• Use accounting software from day one
• Review expenses monthly

Set aside money:

• Estimate tax liability
• Set aside monthly
• Avoid surprises at tax time

Stay informed:

• Tax laws can change
• Keep up with relevant updates
• Consult advisor for major changes

Use technology:

• Accounting software (Solobooks)
• Receipt scanning apps
• Cloud storage for documents
• Automated expense tracking

How Solobooks Helps

Solobooks simplifies year-end preparation:

• Automatic expense categorization
• Income and expense reports
• Receipt storage and organization
• Export data for tax filing
• Reminders for important deadlines
• Integration with tax software

Need Help?

If you have questions about tax preparation:

• Email us at support@solobooks.de
• Chat with us in the app
• Visit our Help Center for more guides

Last updated: November 15, 2025