My Adventures With the Accountants of Germany
On freelancing and paying taxes in Berlin.
Just after my twenty-third birthday, I became a freelancer in Berlin. I’d only just moved here, and knew I had years of learning German ahead of me, so I felt really lucky to have found freelance work writing and editing in English.
I knew the uncertainty of freelancing didn’t suit my nervous nature, but the two gigs I’d found offered relatively regular work each month, so I thought I’d cope. It was the taxes I should’ve worried about.
I found the online information about registering with the tax office quite overwhelming, so I headed to the local office to try to do it in person. I knew not all of Berlin’s administrative offices would be English-speaker friendly, but I was hoping to find someone who could speak a little, at least. I was in Kreuzberg, Berlin’s multicultural district. I was hardly going to be the first person who needed to pay tax before they’d mastered the German language.
The woman who met me on the other side of the desk was very stern. I began my spiel but after a couple of sentences she stopped me by raising a finger in the air and saying, “Go away and come back when you speak German”.
I returned to the underground train feeling dejected, offended, but also a little bit curious. How many years worth of taxes would I owe by the time my language skills were up to the job?
I didn’t have to find out. The expat community offered up Hansi*, a spangly accountant from former East Germany who specialised in helping newcomers navigate the German tax system and enjoyed a 10.00am glass of sparkling wine. Hansi made accounting look like fun.
Hansi told me that for the very reasonable price of 30 EUR per month she could take all the hard jobs off my hands: the communication with the tax office, a document I needed for my new visa, the VAT (or sales tax) returns I didn’t even know I should have been doing. There was only one hard job I’d have to do myself: save up my income tax for an entire financial year.
She explained that for your first year as a freelancer in Germany, you don’t have to pay any income tax until the end of the year, when your income for the entire year can be assessed. From then on you can make quarterly payments, but for the first year, freelancers have to do the hard slog of saving up a big lump sum to make sure they can pay their income tax bill when the time comes.
She advised me to save up 15 to 20 percent of my earnings each month, which I tried and failed at, because I was 23 and Berlin offered a lot of incredible shopping that I could only have dreamed about back in New Zealand, where I came from. I figured, naively, that I could make up the difference closer to the end of the year.
I had planned to save up 5000 EUR by the end of the year, but had only managed a little less than 2000 EUR. I emailed Hansi to ask her what would happen if I couldn’t pay the whole whopping amount at once. She wrote back telling me not to worry, that if we needed to we could stretch out the due date of my payment to give me some extra time to save up.
Hansi seemed so chilled out, the total opposite of what I’d expect of any accountant, but particularly a German one. The idea that one day soon her email would arrive with the amount due had terrified me, but Hansi really put me at ease.
A couple of weeks later her email did arrive with my income tax return attached and a message to say I should transfer 1558 EUR to the tax office when I was ready.
Well that can’t be right, I thought. That’s not even a third of what I’d been expecting to pay.
I emailed Hansi to check whether there had been a mistake but she replied with a whole line of emoji to celebrate the surprise she’d always known was coming. “Go book yourself a vacation!!!” she wrote.
Hansi herself was regularly on vacation.
For the first few weeks I couldn’t decide whether I thought this had been a sick trick, or a huge blessing. I decide to go with the guardian angel line. I told myself Hansi had saved my butt.
Over that summer Hansi stopped replying to my emails, and I assumed she was sunning herself on some Spanish island again. But eventually the expat whisper trail got back to me: Hansi was dead.
Poor Hansi had died from a lung infection, aged just 48. I’d only met her once, and yet she had made my new life in Berlin so much easier. I felt so sad for her family, her teenage son and her partner who she’d told me worked at the tax office himself, “so if anything changes there I always get the news first!” As if I’d needed any further convincing that she was the accountant for me.
Who would be my accountant now?
Stefan* was the quintessential straight-laced German accountant. He was double the price. He was no fun. And he did not have any good news for me like Hansi always had.
Saying he was double the price makes him sound like a rip-off — that’s not totally fair. It turns out accountancy fees here are based on your earnings, so Stefan was only charging market rate. How Hansi had managed to charge so little, I will never know.
Bizarrely for a freelancer, I had managed to earn an almost identical amount in 2015 as I had in 2014. So when it came time for Stefan to do my 2015 income tax return, I didn’t expect any surprises. The quarterly payments I’d been making all year should have been pretty bang-on.
So when he wrote to say I owed an additional 2454 EUR for 2015, it took my breath away. How could that be possible, I asked. I refused to believe it for about two weeks. Stefan argued that some of the expenses Hansi had taught me were tax deductible actually weren’t. But in the end they didn’t make all that much of a difference. I read his work over and over and it all made sense. I would really have to cough up.
Not only would I have to find that money, I would also have to save up more income tax for the current year, 2016. I worked out I’d need to find an additional 4000 EUR all up. I was bowled over with the stress of it.
And what had happened with Hansi? Had she been fiddling my accounts, or made a genuine mistake? Or was this new guy being really stingy with my expenses? I wasn’t sure about any of it. The only thing I was sure about was that I definitely couldn’t afford an accountant anymore. I’d have to learn to do my taxes myself.
I spent most of 2016 hustling extra jobs and learning my way around the German online tax software. Finding new work turned out to be the easy part; I spent many long nights with Google translate, trying to decipher the bureaucratic German used in the online forms and make sure I’d filled in all the right boxes. Every time I did a small thing right I’d celebrate with a treat. This wasn’t German I could use in a conversation, but I was making it work.
This January I did my income tax return for 2016. I was really eager to see what the final bill would look like. Because now, at age 26, I really had managed to reach my formidable savings goal. I’d saved up one big lump of income tax for the 2015 bill and another one for the additional income tax I was expecting to pay for 2016.
Well, the software spoke and it was glorious. I owed far, far less than what I’d saved up for 2016. So much less, in fact, that it was the tax office that owed me. I had 30 EUR deposited into my bank account the next month. That second big lump I’d saved up was mine to keep.
When I looked back, I could see that my 2016 return more closely matched the way Hansi had done things. But I knew I hadn’t cheated. I’d followed the advice I found online about tax-deductible expenses and the tax office had accepted it.
It seemed like Hansi had been working for me, while Stefan had been working for the tax department.
So maybe my financial failure hadn’t been trusting the accountant who drank in the morning, but the suit who didn’t care.
In March this year I took a trip to the local tax office, the same one I’d avoided since being told to get out in 2014. I hoped to get my quarterly payments for 2017 reduced, as they were now three times higher than they really needed to be thanks to Stefan’s overzealous return. On the way over I practiced in my head what I’d need to say in German.
This time I was allowed beyond the front desk. I was directed upstairs, to a very specific office where one very specific man would decide my fate. Only he could make me a new tax assessment and get my payments reduced. I caught him just before he was due to leave for the weekend. I said what I needed to say in German and then understood when he told me what I wanted wasn’t possible.
What I didn’t understand was why he started doing it for me anyway. Before I could be sure I knew what was happening, my new tax assessment was being fed out of his printer and into my hands while Spirit in the Sky played out of his desk radio. It definitely felt like a divine moment.
I still struggle to have interesting, meaningful conversations in German. But it’s empowering to know that I can now walk into the tax office and advocate for myself. I may not have been able to salvage all of my twenties from the German tax system, but this time I left the tax office victorious.
These days I do the Hansi trick on myself. I’m really looking forward to my ‘surprise’ holiday sometime in 2018.
Vanessa Ellingham is a Kiwi freelance journalist and editor in Berlin. She runs an online magazine for migrants of all kinds in the German capital.