Tax Tips for Entrepreneurs: The Best Tax-Saving Tips for 2025

Entrepreneurs, the self-employed, and freelancers have numerous opportunities to reduce costs and taxes in 2025. Below are essential tax strategies for the 2025 tax year.

Tax Tip 1: Utilize the Per Diem Allowance

The per diem allowance (formerly known as the home office per diem) offers tax relief for work done at home. For 2025, you can deduct €6 per day when working from home, even if you only have a work corner rather than a dedicated room. The maximum annual deduction is €1,260. This allowance applies even for minimal work periods (as little as 5 minutes) and can be claimed alongside a home office deduction. It helps avoid the risk of your home unintentionally becoming a business asset under Section 8 EStDV.

Recommendation: Keep a diary of your work-from-home days as documentation, even though formal proof isn’t required.

Tax Tip 2: Request Reduced Advance Payments

When your business needs additional cash flow, consider applying for reduced advance payments on income tax, corporation tax, and trade tax. Income and corporation tax advance payments for Q1 are due from March 10, while trade tax advance payments for Q1 are due February 15. Submit reduction applications well before these deadlines.

Important Note: Trade tax reduction requests must be submitted to the tax office, even though municipalities collect the tax.

Tax Tip 3: Apply for 2025 Wage Tax Allowance

Managing partners of a GmbH receiving wages should plan for 2025 tax purposes now. Apply for an income tax allowance if you anticipate significant income-related expenses, special expenses, or extraordinary expenses. This also applies to expected losses from commercial or self-employed activities or rental property costs. Applications can be submitted via ELSTER. Successful applications will reduce your taxable gross salary, resulting in higher net wages.

Be Aware: If you apply for this allowance, you must file an income tax return for 2025.

Tax Tip 4: Take Advantage of Immediate Deduction for Low-Value Assets

Immediate business expense deductions are available for low-value assets (GWG). This applies to movable, independently usable items with a cost limit of €800 net.

Special Case: Business computer hardware and software has a useful life of only one year, allowing full deduction in the purchase year regardless of cost (BMF letter dated 22.2.2022, IV C 3 – S 2190/21/10002 :025).

Tax Tip 5: Benefit from Enhanced Special Depreciation

The Growth Opportunities Act introduced more generous special depreciation for movable fixed assets. A 40% special depreciation allowance (increased from 20% through end of 2023) is available for items purchased in 2025. Requirements include that the previous year’s profit (2024) must not exceed €200,000, and at least 90% business use in the purchase year and following year must be documented.

For Vehicle Purchases: Maintain a logbook to document 90% business use. If the vehicle is provided to an employee as a company car during these two years, the 90% requirement is automatically satisfied.

Tax Tip 6: Apply for Permanent Extension

For businesses struggling with monthly VAT filing deadlines, a permanent deadline extension grants one additional month for preparation, submission, and payment. Application deadlines are April 10, 2025 for quarterly filers and February 10, 2025 for monthly filers. Monthly filers must make a special advance payment of 1/11 of the previous year’s VAT payments by February 10. This payment is offset against the December 2025 VAT.

Note: Self-employed individuals and freelancers filing quarterly returns can also receive this extension without special advance payment.

Tax Tip 7: Leverage New Small Business Thresholds

The small business regulation (Section 19, German Value Added Tax Act) allows qualifying businesses to charge without VAT (beneficial for private customers), skip VAT returns and advance VAT returns, and forgo input tax refunds.

New Thresholds for 2025: Previous year’s turnover limit increased from €22,000 to €25,000, and current year turnover limit increased from €50,000 to €100,000.

Tax Tip 8: Investigate Electricity Tax Refund Eligibility

Manufacturing companies facing high energy costs should note that electricity tax refunds may be available under certain conditions. Application is submitted to the main customs office. Refund amounts must be declared as business income.

Tax Tip 9: Employ Family Members

Strategic family employment offers multiple benefits. Flexible staffing with mini-jobs (marginal employment) can be advantageous. Monthly salary (up to €556) and flat-rate contributions are deductible operating expenses. Family members pay no additional taxes on mini-job salaries.

Documentation Required: Keep detailed records of work performed, including dates and extent of work, in case of tax office inquiries.