Automatic tax return: How Germany could learn from Austria

An old braid that stubbornly holds on

The annual tax return is an unpopular compulsory program for many working people in this country. ELSTER, tax apps, consultants – if you want to keep track of things, you need either patience or professional help. It’s often about little things. Pay slips, insurance data or commuter allowances that have already been recorded, which ultimately lead to repayments.

What hardly anyone knows is that things have long been much easier in Austria. There, the tax office takes care of the assessment itself for many employees. No application, no paperwork. This is made possible by a system that automatically evaluates existing data and initiates the repayment – without anyone having to take action.

Pre-filled but not completed

Germany has actually already created the conditions for such a system. The so-called “pre-filled tax return” – in short: VaSt – has been around since 2014. The ELSTER platform already collects information that is already available to the tax office. Wages, health insurance, pension benefits: everything ends up automatically in the form, according to steuerverbund.de. But in the end, the burden remains with the citizens. The declaration must be checked, supplemented, signed and submitted. The potential is enormous. According to the Federal Statistical Office, around 90 percent of voluntarily submitted tax returns in Germany result in a refund. Nevertheless, millions don’t do anything and are thus wasting money that is actually theirs.

What makes Austria different

In Austria, consequences were already drawn in 2017. Anyone who is not obliged to submit a tax return and only earns income from employment will automatically receive a tax assessment. Without an extension of time, without an application. If the tax office has all the necessary data, it automatically checks whether a repayment is due. If the credit is at least five euros, the payment will be made in the second half of the year, according to Arbeitkammer.at.

The thing works because the system is based on reliable data sources: employers, social security, banks – all deliver digitally. If you don’t want to claim any extraordinary charges or special expenses, you don’t have to worry about anything else. The tax office takes into account the flat rate for business expenses, as well as a home office flat rate based on home office days reported by the employer.

Simplicity with side effects

What initially sounds like a perfect model also has its limits. Anyone who wants to incur high advertising costs or specific deductions must continue to actively submit a tax return in Austria. The automatic procedure only takes into account the basic data. This restriction was deliberately chosen to avoid misunderstandings and additional demands and is openly stated on authority portals. At the same time, the Austrian approach shows how many repayments are possible without additional information. The system brings noticeable advantages, especially for low-income earners or people who cannot make full use of their tax options. In a current reform report, the EU Commission calls the model a “best practice” example of modern, efficient tax policy.

Editorial team finanzen.net