How do you correctly enter employee shares from the USA?
If you have received shares from your US employer as part of an employee programme, you must declare this benefit in your German tax return. In this article, we will explain step by step how to do this easily with Lohnsteuer kompakt – and how to avoid paying tax twice.
When are the shares taxable?
If shares are not transferred to you immediately but only after a certain waiting period (known as the vesting period), they are considered to have been "received". From this point on, they belong to you and are considered additional wages in Germany – like a salary in the form of shares.
The value of the shares at the time of transfer must be declared in the tax return and is taxable in Germany. In many cases, your US employer has already withheld taxes on this share value. You can have these US taxes credited in Germany to avoid double taxation.
How to record employee shares in Lohnsteuer kompakt
Enter wages without tax deduction
Navigate in Lohnsteuer kompakt to:
"Income from employment" > "Other income" > "Wages without tax deduction"
Enter the full market value of the transferred shares there - e.g. 20.000 Euro.
Credit foreign tax
Go to:
"Foreign income" > "Creditable foreign taxes"
Add the following information:
- Country of origin: USA
- Income: 20.000 Euro
- Creditable tax: e.g. 10.000 Euro, if verifiable
The tax office will then check whether and to what extent the US tax can be offset against your German tax.
Additional information for the tax office (recommended)
It is best to supplement your tax return with a brief explanation in the section "Message to the tax office".
Example: As part of my US employer's employee share programme, shares with a total value of 20.000 Euro were transferred to me in 2024. 50% (10.000 Euro) was withheld as a flat-rate tax. I apply for the crediting of this foreign tax in accordance with the Germany–USA DTA.
Submit documents (recommended)
Submit documents from your employer or broker with your tax return showing the market value of the transferred shares and the amount of foreign tax withheld. Although it is not mandatory to provide this evidence, it is recommended to avoid queries from the tax office and to clearly demonstrate the crediting of the foreign tax.
Tip: After submitting the tax return, you have the option to submit the documents electronically with Lohnsteuer kompakt.
What applies when selling the shares later?
If you sell the shares later and make a profit, you must pay tax on this profit in Germany. This is called capital gains tax. The value the shares had when received (e.g. 20.000 Euro) is considered the "starting value". Only the profit above this must be taxed.
Example: You sell the shares later for 25.000 Euro. Since the purchase value is 20.000 Euro, only 5.000 Euro must be taxed.
How do you correctly enter employee shares from the USA?
Tax relief for volunteers in vaccination and test centres
Voluntary helpers in vaccination and test centres were already able to benefit from tax relief in the years 2020 to 2022, and these regulations also apply for 2023.
The regulations are uniform across Germany and concern the trainer's allowance and volunteer allowance. Helpers directly involved in vaccinations or tests can use the trainer's allowance, while the volunteer allowance applies to those working in administration or organisation.
It is important to note that the tax relief only applies if the employer is a charitable organisation or a public employer, not for doctors' surgeries or private test centres.
The trainer's and volunteer allowances only apply to part-time activities, which usually take up less than one third of the working hours of a full-time position or have a weekly working time of a maximum of 14 hours. These allowances are annual amounts and cannot be prorated.
Doctors' surgeries are excluded from these regulations. If doctors pay employees a bonus for the additional work, the trainer's or volunteer allowance cannot be used for this.
The allowances of 3,000 Euro or 840 Euro can also be taken into account by the employer when calculating income tax. In this case, the employee must confirm in writing to the employer that the respective allowance has not already been "used up" elsewhere.
Tax relief for volunteers in vaccination and test centres
Which tax-free expense allowances do I need to declare?
If you have received tax-free expense allowances, please enter them here. This includes allowances received from public funds, a federal or state fund.
Employees often receive a tax-free expense allowance from part-time work. This could be as an instructor, educator, trainer in the sports sector or as an artist such as a choir director or musician, and also as a carer for sick, elderly or disabled people. It must be an educational or caregiving activity.
Payments for such eligible part-time work are tax and social security-free up to 3.000 Euro. The condition for the tax benefit is that the activity is carried out part-time, for a charitable organisation or a legal entity under public law, and serves charitable, benevolent or religious purposes.
The allowance of 3.000 Euro is granted only once per person, even if you have several eligible activities. It is therefore personal and not activity-based. The allowance is an annual amount. Therefore, payments up to the maximum amount remain tax-free even if you do not carry out the eligible activity for the entire year.
As a supporter of such an organisation, you can receive part or all of your expense allowance tax-free. However, any amounts exceeding the allowance of 3.000 Euro must be taxed. If your expense allowance is less than 3.000 Euro, you can only claim the lower amount.
Example
Ms Meier teaches at a music school and receives 2.800 Euro annually for this. She also supervises a gymnastics group at the primary school and receives another 400 Euro per year for this. Both activities are tax-privileged under § 3 No. 26 EStG, but only up to a total of 3.000 Euro. Ms Meier must tax the remaining 200 Euro.
Which tax-free expense allowances do I need to declare?
What is the "Special Cross-Border Commuter Regulation"?
These regulations apply to commuters who live in Germany and commute to work in France, Austria, or Switzerland. This is governed by the respective double taxation agreements. If you work in one of these countries, you must pay tax on your income in Germany, not in the country where you work. However, this only applies if your place of residence and work is in the border zone of the respective country. For France, the border zone is 20 km on either side of the border, for Austria it is 30 km. In Switzerland, there is no such border zone.
There was also a special cross-border commuter regulation with Belgium until 2003. However, since 2004, the general regulation has applied. This means for cross-border commuters to Belgium: The salary is no longer taxed in the country of residence, Germany, but in the country of employment, Belgium. In Germany, the income is exempt from tax but included in the calculation of the tax rate. However, there is a special tax regulation for commuters from Belgium to Germany: Belgium, as the country of residence, exempts the wages taxed in Germany as the country of employment and only includes them in the calculation of the tax rate. However, this income is included in the Belgian municipal tax, which is an additional tax on income tax. To offset this Belgian municipal tax, German income and wage tax on this income is reduced by a flat rate of 8%.
What is the "Special Cross-Border Commuter Regulation"?
Who receives wages without tax deduction?
In the tax return, you must also enter wages in "Anlage N" from which no income tax was deducted. This may apply to wages from a foreign employer that are taxable in Germany, as well as wages paid by third parties where the employer was not obliged to deduct income tax.
Tip
Such income without tax deduction may be eligible for hardship relief if it does not exceed 820 Euro.
Important: You do not need to enter a part-time job here. For this employment, the employer pays flat-rate taxes and social security contributions. The part-time employee does not pay any taxes or insurance contributions. You do not need to declare the income from the part-time job in the tax return.
However, it is also possible for the part-time job to be taxed monthly according to income tax details (ELStAM). In this case, the part-time job must also be declared in the income tax return under “Employees > Income tax statements”. Your employer must provide you with an income tax statement in this case.
Who receives wages without tax deduction?
When and how must I declare income as a cross-border commuter?
The cross-border commuter tax return raises questions for many employees: If you live in Germany but regularly work in a neighbouring country, you are not automatically correctly classified for tax purposes. The special regulations of the double taxation agreements are decisive. The following article explains clearly when income as a cross-border commuter must be declared, which forms are required for the tax return, and when the progression clause applies.
Who is considered a cross-border commuter for tax purposes?
Cross-border commuters are employees who have their residence in Germany and regularly commute to work in a neighbouring country, such as France, Austria, or Switzerland. The relevant double taxation agreements and the actual return to the German residence are decisive.
Important: Cross-border commuter status does not arise automatically, but only if the conditions are met.
Where is the salary taxed?
As a rule, salary is taxed where the work is performed. However, for cross-border commuters, the relevant double taxation agreement often provides for an exception:
The salary is taxed in Germany, even though the work is carried out abroad.
- The entire salary is subject to German income tax.
- In the foreign country, there is usually no or only limited withholding tax.
- There is no progression clause because the salary is not tax-free but is taxed regularly in Germany.
Cross-border commuter tax return: Where do I enter the salary?
If you are a cross-border commuter in the tax sense, the entry is as follows:
- Form N for regular salary
- additional Form N-GRE, only if you live in Baden-Württemberg and work in France, Austria, or Switzerland
Important: You must not use Form N-AUS in this case. The cross-border commuter regulation and Form N-AUS are mutually exclusive.
Cross-border commuter or not – the distinction
You are considered a cross-border commuter if:
- You regularly return to your residence in Germany.
- You comply with the permitted number of non-return days (e.g. Switzerland: maximum 60 days).
- Your salary is taxed in Germany.
Consequence: Entry in Form N (and possibly Form N-GRE), no progression clause.
You are not considered a cross-border commuter if:
- You do not return to your German residence often enough.
- You mainly live or work abroad.
- You have other foreign income that does not fall under the cross-border commuter regulation.
In this case, the following usually applies: Taxation in the country of work. The salary is often tax-free in Germany but increases the tax rate for other income through the progression clause according to § 32b EStG.
=> Entry: Form N-AUS.
Special features depending on the country
- France and Austria: Cross-border commuters generally tax their salary in Germany.
- Switzerland: The employer may withhold 4.5 percent withholding tax. This is usually credited against German income tax.
Special case: Civil servants and public service
For civil servants and public service employees, a special rule applies: Income is generally taxed in the employer's country, even if the other conditions of a cross-border commuter situation are met.
Conclusion
The cross-border commuter tax return depends crucially on where the salary is assigned for tax purposes. Those who meet the cross-border commuter regulation declare their income as domestic salary and avoid the progression clause. If the conditions are not met, Form N-AUS is required. A clear distinction reduces queries from the tax office and prevents unnecessary tax disadvantages.
Elektronischen Steuererklärung ohne Anlage N-GRE
In practice, it may happen that Form N-GRE is not separately supported in some electronic tax programs, for example when using Lohnsteuer kompakt. In these cases, this does not automatically mean that the cross-border commuter information is lost.
If your salary is fully taxable in Germany, it will still be correctly declared in Form N. The additional information relevant for cross-border commuters (e.g. about the foreign employer or cross-border commuter status) should then be added in the designated free text or explanation field of the tax return.
It is also advisable to include a short written explanation stating that the conditions of the cross-border commuter regulation are met. This makes it easier for the tax office to classify and reduces queries.
Important: Even if Form N-GRE cannot be selected technically, the material tax obligation remains unchanged. It is crucial that the salary is correctly declared as taxable in Germany.
When and how must I declare income as a cross-border commuter?
Do I need to declare my part-time job in my income tax return?
A mini job is defined as employment where the monthly wage does not regularly exceed 556 Euro. The period for determining the regular monthly wage is a maximum of 12 months.
Tax and social security
In a mini job, the employer pays flat-rate taxes and social security contributions. The employee does not pay any taxes or insurance contributions.
Tax return
A mini job usually does not need to be declared in the tax return. An exception applies if the employer does not opt for the flat-rate income tax. In this case, the employee receives a payslip and must enter the relevant data in their income tax return.
Minimum wage adjustment
On 01.01.2025, the minimum wage is set to rise to 12,82 Euro per hour. This will increase the mini job limit to 556 Euro (2025).
Limits for mini jobs
The earnings limit for mini jobs can be exceeded a maximum of twice within a calendar year. Exceeding the limit is only permitted for up to two months within a year and must not exceed a total of 6.456 Euro (or in exceptional cases up to 7.532 Euro) per year.
Do I need to declare my part-time job in my income tax return?
