Tax authorities initiate tax filing project in Hessen
In a significant step towards modernising the tax administration, Hesse, a German state, has launched a pilot project that will see the automatic proposal of income tax settings for a limited number of taxpayers. This initiative marks an important step towards a more citizen-friendly tax system, according to Hesse's Finance Minister, Lorz.
The project, which is currently being offered to around 6,000 taxpayers in the Kassel area who missed the deadline for submitting their income tax return for 2024, aims to simplify the tax return process for those with straightforward tax situations.
Under the pilot project, taxpayers will not have to fill out their own tax return. Instead, they will receive a proposal from the tax authority, which they can accept or supplement using the Elster software. The basis for the tax office's proposal are data on wages, pensions, and insurances already available to the tax administration due to relevant notification obligations.
The German Tax Union (DTSG) has welcomed the pilot project as an important step towards a modern, citizen-friendly tax administration. However, the union has called for the abolition of tax returns for employees with simple tax situations, advocating for fully automatic tax return preparation by tax offices, pending only employee review or supplementary input.
Despite the progress in Hesse, widespread adoption of automatic tax returns across Germany beyond the pilot project has not been reported or established as of 2025. Discussions and calls for simplification, including automatic preparation of tax returns for employees, are ongoing but still in the advocacy and gradual development stage rather than broad rollout.
Meanwhile, Germany is advancing significantly in electronic invoicing (e-invoicing) and tax data reporting infrastructure, which may eventually facilitate broader use of automatic tax return processing. The focus of recent reforms and regulations centers more on mandatory electronic invoicing, digital recording, and reporting obligations rather than fully automatic tax returns.
The federal chairman of the German Tax Union believes that full digitalization would allow tax officials to focus on complex and important cases. The authority can also save resources with the implementation of the automatic proposal of income tax settings.
If the pilot project in Kassel is successful, it is expected to be expanded. Beyond Hesse, discussions on the implementation of similar projects are ongoing, but no concrete plans have been announced yet.
It is important to note that not every employee in Germany is obliged to submit an income tax return. Freelancers, self-employed persons, and traders are generally obliged to submit a tax return. Anyone receiving replacement income such as unemployment benefit, parental benefit, or short-time work benefit of more than 410 euros per year, or having multiple employers at the same time, must submit a tax return.
In conclusion, while the idea of automatic tax returns is gaining political and labour union support, widespread adoption across Germany beyond Hesse's pilot has not been reported or established as of 2025. The success of the pilot project in Hesse could pave the way for similar initiatives in other states, potentially simplifying the tax return process for millions of Germans in the future.
The pilot project in Hesse aims to streamline the tax return process for selected taxpayers by automatically proposing income tax settings based on available data, bypassing the need for taxpayers to fill out their own returns. The German Tax Union supports this initiative and advocates for full automation of tax returns for employees with simple tax situations.
