Expatriates: 10 tax issues to be considered in Germany

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Tax systems are different in every country. Therefore expatriates working abroad face special challenges. German tax regulations are different to regulations in other countries. Individuals who are working and living in or considering re-locating to Germany should pay attention to 10 important topics.

No. 1: Tax rates

Germany has the reputation of being a high tax jurisdiction. This is the case for individuals with high income.  The maximum income tax rate is 45% plus solidarity surplus charge of 5.5% on income tax. Therefore the combined maximum rate is 47.5%.

The tax burden on lower or average income is endurable. In addition German tax law is less strict concerning the deduction of income related expenses compared to most neighbouring countries. And it provides a wide range of personal allowances and a relatively liberal acceptance of private expenses. Foreign individuals are often surprised by the relatively low tax burden on average income.

The real problem is social security liability if applicable. The social security contributions are one of the highest in Europe. Individuals coming to Germany should always seek advice on whether or not they can avoid German social security contributions.

 No. 2: Tax assessment

The majority of Anglo-American countries adopted a self-assessment regime for income taxation. US- or British citizens for instance have to file their income tax return and to calculate their tax burden. On this basis the income tax has to payed.

In Germany the system is different. The taxpayer also has to file income tax returns. These tax returns are basis for the tax assessment by the fiscal authorities. The final tax amount is calculated by the tax office. Consequently every taxpayer receives a tax assessment note. Please be aware that this ugly looking printout on recycling paper is the most important document you receive from your tax office. If there is a mistake in the tax calculation or your legal opinion varies from the one of the tax office your can file a legal protest within a month. If you miss the deadline you lose your legal position. Then the tax office can reject the correction even if they have made the mistake. Therefore it is important to check the tax assessment note within the one month time frame. If you have a German tax adviser you should send the note to him as soon as you receive it.

 No. 3: Work related expenses

Employees are entitled to a lump-sum deduction for work related expenses not exceed Euro 1.000 p.a. If expenses exceed this amount the proven expenses are deductible. There is a standardized deduction for commuting between home and work by car of Euro 0.30 per kilometre (one way). Germany’s tax law allows the deduction of most other work-related costs such as travelling costs, contributions to professional associations and unions, necessary expenses for two households, depreciations on IT and other assets used for working purposes etc. A special limitation exists for the expenses for the taxpayer’s home office.

More about issues to be considered if working in Germany see here.

No. 4: Relocation expenses

Very interesting for expatriates moving to Germany or back to their home countries is the possibility of  deducting relocation expenses. Deductible are all removal/transport and travelling costs for the employee and his or her family. Deductible are also expenses for flights to search for a home in Germany. Additional expenses such as compensations for rental contracts, broker fees for procuring flat or home or in connection with childcare can be deducted.

The employer may reimburse those expenses free of tax. However, if the employer does not reimburse all relocation expenses, the employee is entitled to deduct additional costs in his or her German income tax return. In addition there are special lump-sum deductions for international relocations. These deductions are significant.

No. 5: Personal deductions and allowances

Under certain conditions contributions to statutory or private pension schemes, mandatory contributions to health, accidental and liability insurances and to insurances for disability and old age are deductible. This also applies for contributions to foreign insurance companies if their products fulfil certain criteria set by German tax law. Very dangerous in this respect are fund-based pension plans (see next number).

Donations to German and foreign charities and non-profit organisations are also deductible if they fulfil certain obligations. Alimony payments up to Euro 13,805 for a divorced or separated resident spouse is deductible if the spouse agrees to be subject to German income tax with these payments. There are a varity of other allowances and deductions.

No. 6: Fund-based pension plans and trusts

Most expatriates from English speaking countries have pension plans which are fund-based. Tax implications of these plans are often ignored and can lead to disaster. In general contributions to these plans cannot be deducted because the foreign plan do not fulfil certain German legal requirements. If the German employer pays a proportion of the contributions these payments are taxable income. Beside this a far more serious danger lurks around the corner. If the investment funds are non-transparent (which in general they are) a penalising tax regime comes into force. The taxable income will be increased by at least 6% of the last published market price of the calendar year. A higher amount might be applicable under certain circumstances. This taxation of investment funds take place regardless of the fact whether profits or capital are distributed or not. It is also irrelevant whether the fund is profitable or not. This tax regime is designed for Germans who try to avoid German taxation by investing in tax havens and by „accident“ it also hits expatriates with fund-based pension plans.

Obviously this tax implication was not designed to tax fund-based pension plans of expatriates. It is very questionable whether these tax regulation is in line with European freedom rights. Along with a team of experts I am working on a defence strategy. We will forward this issue to German fiscal courts and if necessary to the European Court of Justice.

Even more dangerous is the German tax regime of trusts. This applies for expatriates moving to Germany if they are beneficiary or settlor of a trust. For more information see an article on the website of the IAPA International Association of Professional Advisers.

No. 7: Property service fees

Germany has a very special tax regime for private motivated expenses. Normally they are not tax deductible but expenses connected to private homes are deductible up to certain limits. This applies for services such as housekeeping, chimney sweeping, housemaids, gardening, snow clearing etc. It also applies for certain maintenance and repair work at your residential home. You can deduct these costs even if you are a tenant of a flat. Your landlord or property manager should provide you with a special property expenses statement.

These regulations apply for all properties used for residential purposes regardless of where the property is situated in the European Union (EU) or the European Economic Area (EEA). Therefore expenses connected to holiday homes can be deducted, One can deduct these expenses for a holiday home on the Costa del Sol if he provides the tax authorities with proper invoices and bank statements associated with the same.

No. 8: Foreign source income

Most expatriates moving to Germany think that their foreign source income is not subject to German income taxation. This is a grave misjudgement. Foreign source income is either taxable in Germany or it effects the progressive German income tax rate. In both cases the income has to be declared in the German income tax return.

The calculation of foreign source income has to follow German legal requirements. This may require a recalculation of foreign source income. This is especially the case for business and rental income (for example recalculations of depreciations or capital allowances).  Foreign income taxes including withholding taxes can often be offset against German income tax if foreign source income is taxed in Germany.

No. 9: Stock options

A special problem arises from employment income related to stock options. Respective benefits will be taxed in Germany under certain conditions. Taxed will be the difference between the value at the time of purchasing the stocks and the value at the time when the options have been granted. For the allocation of taxation rights the time between granting the options and the vesting time (vesting period) is applicable. This means that if somebody worked for an employer in the vesting period in different countries he may have to pay taxes in two or more countries.

Example: The vesting period was 2 years. For one year employee worked in the USA and for the other year he worked in Germany. Half of the benefit will be taxed in the USA and the other half in Germany.

If your employer withheld German income tax on the full benefit you have to declare the tax-free part in your German income tax return in order to reclaim the unjustified tax. In general it is easier if you or your employer apply for an exemption form from the Federal Central Office for Taxes. In this case your employer is not obliged to withhold taxes on the exempt amount.

No. 10: Paperwork

German income tax law requires a lot of information when filing out the income tax return. It also grants various deductions and allowances. In return German tax authorities ask for extensive proof and documentation. It is therefore advisable to keep all documents regardless whether they are of a German or foreign source. Lack of documentation might result in significantly higher taxes and lack of knowledge can prove expensive.

See also: Expatriates – 10 issues to be considered if working in Germany

Glossary

Income Tax Einkommensteuer
Solidarity Surplus Charge Solidaritätszuschlag
Social Security Sozialversicherung
Income Tax Return Einkommensteuererklärung
Tax Assessment Note Steuerbescheid
Property Service Fees Haushaltsnahe Dienstleistungen
Property Expense Statement Hausgeldabrechnung
Relocation Expenses Umzugskosten
Tax Adviser Steuerberater
Federal Central Office for Taxes Bundeszentralamt für Steuern

Author: Peter Scheller – Master of International Taxation – Steuerberater

Bildquelle: www.fotalia.com

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136 Antworten auf Expatriates: 10 tax issues to be considered in Germany

  1. Peter Scheller sagt:

    Winter (Snow) Clearing Services:

    In general expenses for winter clearing services are deductible as property service fees. This is the case if snow would be cleared of the own property. Expenses of clearing public sideways or pavements were not deductible. This was the opinion of German tax authorities.

    The Federal Fiscal Court (Bundesfinanzhof) ruled on 20/03/2014 (VI R 55/12) that expenses for winter clearing services are deductible regardless who owns the property. The clearance of snow must only be connected with the house or flat somebody lives in. This means that expenses can be deducted in total.

    This should also apply on other property related services such as normal street and footpath clearing.

  2. Dear Peter, I am inquiring re tax in Germany which relates to a foreign company in the entertainment business providing shows to a German Promoter. What are the tax obligations or can we apply for exemptions as an Irish company providing these shows.
    Our company in Ireland pays the wages to all of the artists while on tour . The artists are all from Ireland /UK and Ireland and are employed by the Irish Company on a self employed basis for the run of each show. .After our deductions like wages ,flights.per diems to cast the nett figure left is approx 15 % to 20%of the gross.

    Kind regards
    Michael Durkan

  3. Peter Scheller sagt:

    Hi Michael, I am pretty sure that either your company or the artists will be liable to German income tax (Article 16 Double Taxation Agreement Germany Ireland). I supppose that German promoter has to withhold taxes.

    You also have to check how to get a tax reduction by claiming job or business related costs.

    Furthermore you have to check your position in regard to the German Social Security System for artists.

    I suppose you should consult a German Tax Adviser in order to get things sorted out.

  4. Cliff Adams sagt:

    No 3 Work related expenses:
    „There is a standardized deduction for commuting between home and work by car of Euro 0.30 per kilometre (one way). “

    Did I read correctly that the travel expenses only apply to one-way travel? Either that was not correctly worded, or there is something very wierd with this law. Then it is actually a 0.15€ cent deduction for the entire commute. Please confirm if this is correct.

    I have also heard that it is possible to deduct for any vehicle whatsoever the same amound, event a bicycle.

    Also, if the vehicle, either automobile or bicycle is leased through the employer, then there is an additional 0.03€ deduction.

  5. Peter Scheller sagt:

    Hi Cliff,

    You have to distiguisch between normal travel expenses (Business or job related) and travels between private home and workplace. Only the second disallow the full deduction (15 Cent on every km).

    Other business or job related travel expenses can be deducted with 30 Cent per km.

    Within the next weeks I will try to do an additional article clarifying all these issues.

  6. Nitin Soni sagt:

    Dear Sir/ Madam
    Thanks for the valuable information. Its really helpful.
    I came in Hannover, Germany, in May’2015 from India for work in a company with my wife and 7 years old daughter. Please suggest me on below query:

    1. Can I get some refund or rebate in paying of school fees for my daughter in International school ?
    2. Can I show my trip back to India (to meet my parents) as an expense ?
    3. Can I show expenses for buying furniture here in Germany for settling down here ?
    4. Can I get some rebate on ‚Personal Liability Insurance‘ also ?

    Thanks

  7. Eden Wolf sagt:

    Dear Peter,

    My husband is working on permanent contract in Germany since 2014. He has filled in a tax declaration for 2014. He was in tax category 1. We got married in the beginning of 2015 and he changed his tax category to 3 in Sept 2015. We also had our child born in 2015. I was working half of the year 2015 in another EU country and now a receive a maternity leave from this country (I don’t get a maternity leave from Germany). I have two questions in regards of 2015 tax return:
    1. Is my husband obliged to fill in a tax return for 2015?
    2. What documents do I need to provide for my income? I have a receipt for my employment income for half of 2015. Do I need to declare my maternity leave money from the other country? How this reflects on the taxation in Germany or these money are tax exempt since we have paid taxes in the other EU country?

    Thank you in advance!

    • Peter Scheller sagt:

      Hi Eden,

      1. He has to file a tax return (since he changed the tax class to III). I supoose you have to file also a tax return as well. However, it looks to me that a joint return might be the best solution.

      2. To answer question No. 2, I need much more information and to see your documents.

      I suppose you need to consult a German tax adviser (Steuerberater) who has expirience in expat taxation in Germany.

    • Nicola Paletta sagt:

      Hello Eden,
      I have a similar problem (see my post below). How did you manage yours?

      Thank you!

  8. Thomas Ritter sagt:

    Hello Peter,

    I have question about retiring in Germany. My wife and I are considering living 6 months in Germany and then the rest here in the USA. We both have retirement income from US sources only. The twist to this that I’m a German citizen and she is a US citizen. I have never worked in Germany so I am not eligible for any pensions there. I’ve read that non-EU/German citizens can retire and live in Germany provided they can prove income and health insurance. Does this apply to a German citizen too? Am I going to have to pay income tax on my US retirement income even though I have never worked in Germany ( I left Germany with my parents as a teenager). Do US citizens not working in Germany pay any income tax on their US retirement?

    • Peter Scheller sagt:

      To give a precise answer on your questions we need more infomation.

      • Melani sagt:

        We are Americans who lived in Germany for 6 years. We have just filed our taxes in Germany for 2012, and are due a refund. We do not have a German Bank account to have the funds transferred there, and our tax office in Germany are saying we need an IBAN, which US banks do not use. How can we get our refund?

        • Peter Scheller sagt:

          I know the problem and I am not sure whether the tax office’s opinion is in line with German tax law.

          However, the office will not tranfer money to a foreign bank account. You may ask them whether they give you a check (doubtfull). Or you use a bank account of you employer or a friend.

          The easiest way is to open a bank account with a German bank.

          By the way. You know that your are little bit late with your filing of tax returns? The deadline for the 2015 return will be at the end of the year (latest). 2013 and 2014 are over due.

  9. Teo Dosia sagt:

    I am foreign worker in middle east & will be married to a German in Germany. I will stay working outside for few months after marriage. My question is, once married and assuming that I will be getting a residency permit, am I required to pay taxes on my income outside of Germany even though I am still not living there?

  10. Heidi Erdmann sagt:

    Hallo Peter,
    I held an income property for 25 years in Germany and just sold it.
    As an American with a dual citizenship I do not pay capital gain taxes in Germany but have to pay taxes on the gain in California.
    Is there any way to save on Capital gain taxes?

  11. Peter Scheller sagt:

    In Germany you do not have to pay taxes on the capital gain because you held the property for more than 10 years.

    I cannot say why you do not have to pay Federal Tax (probably because of provisions of the Double Taxation Convention – DTC).

    The problem with US-State Taxes is that they are not covered by the DTC (see article 2). Therefore you have to consider California’s income tax law. I am not an expert on it. You have to ask a US-tax specialist.

    My co-operation partner is: http://www.greenbacktaxservices.com/

  12. Heinz Schöner sagt:

    Hi, I have a quick question. I am looking to retire soon and move to Germany. As a German citizen who has never worked in Germany I know I will have to pay taxes on my state pension from here in the US but will I have to pay Germany’s social security taxes on my pension?

  13. Peter Scheller sagt:

    You are only liable to German social security contributions if you are an employee. Therefore you will not be liable to German social security contributions on your US state tax. However, you need to have a proper health insurance in Germany. If you have an insurance cover in the US you do not need a German insurance. Otherwise you have to look for a private health insurance.

    Whether you have to pay income tax in Germany and/or the USA depends on various factors (e.g will you retain your Green Card Status). There are certain provisions in the Double Taxation Convention in this regard.

  14. Saloomeh Shariati sagt:

    Hello,

    Thanks for the precious information. Me and my husband are french residents/citizens. My husband got a job in Germany and he will start working on Novembre 2016. We keep our residence in France till April 2016 and my husband will commute each week (he works from distance at home in france 3 d/weeks). I would really appreciate if you can answer my questions. 1- What would be his tax class for 2 months of work in 2016? 2- What would be his tax class for 2017 (From Jan to April 2017 before my arrival) ? I studied in the internet that with one spouse residing in Germany and the other one (Eu Citizen) abroad, the tax class number 3 can be applied to the one residing in Germany. Can you confirm that? In order to benefit from this option, should he rent a flat in Germany and register there? Thanks a lot!

  15. Peter Scheller sagt:

    The tax class III will be available .

    However, your husband has to file an income tax return for 2016.

  16. Mohammed sagt:

    Hi,
    Thank you information above.
    I am now working in Germany ,and I want to transfer saving money in my country to my account in Germany.Will the money I will transfer considered as a new Income,and how I avoid not to be deducted as new Income ?

    Thanks,

    • Peter Scheller sagt:

      This funds are not subject to German income taxation.

      However, you have to be carefull in order to avoid Germany’s money laundering regulations. You should speak to your German bank manager.

  17. Mohammed sagt:

    Hi,
    Also my family (wife and kids ) will come soon .Where I will have to go to claim back deducted money I am now assigned to type One of taxes group ..As I understand that when they will come I will be moved to type Three of taxes group.

    br,
    Mohammed

  18. Peter Scheller sagt:

    You have to file a German income tax return in 2017 for the calender year 2016.

  19. Mohammed sagt:

    What If I buy something from Amazon USA or any other websites ? Is there any limits for custome or there is no limit I will have to pay for custome even for less than 50 EURO

  20. Ramona sagt:

    Hi,
    I came in Germany in 2015 and was in the German tax system till the October 2015.
    Last three months in 2015 I was paying my social contributions to the Germany but I work in the Tax exempt Organization so taxes where not paid.
    I need to do Einkomensteuerklarun for 2015 but I don’t know hot to declare income earned in Multinational non profit organization which is tax exempt for.

  21. Mario Ivano sagt:

    Hallo Peter ,

    I try to help a friend of mine with German tax. He lives in EU but owns and rents a flat in Germany. We have submitted online the Est_1_A form and received the Bescheid for 2015.
    Is there a free allowance for Rental income (8472 euro for 2015)? It looks as if they have used the Einkommensteuer Grundtabelle 2015, where the free allowance is added to the net rental income.
    Thanks in advance for your feedaback!
    Br,

  22. Peter Scheller sagt:

    If your friend is not tax resident in Germany (own residence or habitual abode in Germany) he is not allowed to deduct any personal allowances (icluding the general allowance).

    However, he can deduct all costs related to the flat (including depreciations and interests).

    I advise you to consult a German tax adviser to sort out things properly.

  23. I Eng sagt:

    My spouse is moving with me to Germany. SInce a few years receives pension from several years of saving through former employer – not German. How is such an income taxed by German tax authority?
    thanks

    • Peter Scheller sagt:

      Wether your pensions are taxed or not depends on two different things:

      1) The kind of pension you and your spouse receive.
      2) It depends also on the provisions of the Double Taxation Convention your homeland has with Germany (if there is any)

  24. Tammy sagt:

    Hi,
    I am the trailing spouse of an expat. I had heard that if I work I would be taxed at a level 4, not sure what that is but that it would be high. I was also told that at the end of the year (or when taxes are due) they calculate how much I paid and I might get are refund. Is it worth it to work? I think the job I looked at paid about 2,700 to 3,000 a month

    • Peter Scheller sagt:

      We need much more Information to answer your questions. However, I think that you may be entitled to a refund if filing German tax Returns.

  25. Elly sagt:

    Hi,
    I came to germany in feb 2015 to be with my husband and have been working since June 2015. Unfortunately I totally missed the deadline for tax claim. Is it still possible to do the tax claim at the moment or should I just do it next year together with 2016’s?

    Thank you.

    • Peter Scheller sagt:

      Hi Elly,

      You have to file a German income tax return. If you appoint a German tax advisor (which is advisable in any case) the deadline for handing in the return 2015 is 31 December 2016.

      If you need further support please contact us.

      Peter

  26. Thierry sagt:

    Hello
    I am working in Germany since the 1st of August 2016. My family stays in France. My wife is working in France. I have a German contract. From Monday to Thursday I work in Munich. On Friday I work in Toulouse. I spend my week end in Toulouse with my family. I rent an apartment in Munich
    My question is simple: I am currently Tax category 1, Can I become tax category 3 ? if yes, how should I handle the change ?
    Thank you for your advice

  27. Konstantinos sagt:

    MY FRIEND FROM GERMANY WANTS TO INVEST AN ESSENTIAL AMOUNT OF MONEY ( SOMETHING LIKE 2 MILLION EURO) INTO SOLAR BUSINESS IN CHINA. WHAT IS A TAX REGULATIONS IN THAT CASE AND WHERE AND HOW MUCH HE HAS TO PAY? THANK YOU.

  28. Steve Monteith sagt:

    I am retiring soon from a job with local government in the US. My German citizen wife and I plan on moving to Germany. My wife plans on working while I will support myself with my government pension. I briefly read over the German/U.S. tax treaty and there appears to be a clause which states that U.S government pensions are exempt from German income tax. Is this the case, and if not, what taxes will be levied against my pension income

    Thak You‘
    Steve

  29. Peter Scheller sagt:

    Dear Steve,

    It look like you are right (Article 19 Double Taxation Convention USA/Germany). However, you have to check whether your pension qualifies for this exemption.

    There is another issue to be considered. If you and your wife want to opt for a joint assessment in Germany (which is in general beneficial) you have to check what effect this might have on the taxation of your pension in Germany.

  30. Paolo Vergara sagt:

    Dear Steve,

    Thank you for all the information that you have provided on your site. It is very helpful! I just moved to Germany and started working 1st of September. I received my payslip and it seems that the tax deduction is based on my monthly salary rate.

    From what I understand, Germany considers the whole year for computing tax rates. I am from the Philippines but I worked in Singapore from January to August 2016. My question now is, would I be able to file for a tax refund since my tax rate should be lower since I will be working only for 4 months this year?

    I paid all my taxes in Singapore and I have read that there is an agreement between Singapore and Germany for avoidance of double taxation with respect to income tax.

    Best regards,
    Paolo

  31. Peter Scheller sagt:

    You have to file a Germany income tax return for 2016 anyway. If you paid two much withholding tax you will get a refund.

    I strongly advise you to engage a German tax adviser specialised in international expat taxation.

    Best regards

    Peter

  32. Debora sagt:

    Hello,

    Thank you for having such an informative website and for making yourselves available for questions. My husband and I would like to live in Germany for a couple of years — I lived outside of Aschaffenburg many years ago and loved it. But we are very concerned about taxes. We will be living on my Federal government pension from the United States, which we understand may be exempt from German taxation. We will also have income from two homes in the United States and will be obligated to two different states for taxes on the rental income. In the case of one home, rental income barely covers expenses (mortgage, insurance, taxes, etc); the other home is a family home with no mortgage and nominal expenses (taxes, insurance). Finally, we have income from retirement investment accounts known as IRAs („individual retirement accounts“), including one such plan set up solely for Federal government employees („thrift savings plan“). We do not intend to work in Germany. We are at a loss to understand the income tax implications of moving to Germany. Can you please advise? Thank you very much.

  33. Peter Scheller sagt:

    I suppose your tax burden in Germany will be nil or relatively low. However, it requires a much more Information and a detailed analysis.

  34. cornelia kueffner sagt:

    What about German rental income if I have dual citizenship? Do I have to do my tax declaration in both countries (first in Germany, then in the US? I refer to Article 6 in the main irs source which does not sound exclusive and somewhat vague for me as a lay person.
    https://www.irs.gov/pub/irs-trty/germany.pdf

  35. Peter Scheller sagt:

    You have to declare your rental income both in Germany and the USA. The income will be taxed in Germany. I suppose that you can credit the Germany income tax against the US Federal Tax..

  36. Abi sagt:

    Dear Peter,

    I am starting a new job which is actually located in Austria, but to begin with, I will do a 6 month training in Germany. I have been asked to provide the German HR Office with a Tax Number. But as I am on the Austrian payroll system (I receive my income and am taxed in Austria) and as I will only stay in Germany for 6 months, I am not sure if this applies to me. Should I still go ahead and register for this Tax number and declare everything? Or is it that I work here for 6 months and not get a German Tax number instead provide the Austrian Finanzamt with an Austrian Tax number? I would be very grateful if you could provide some further information on what I should do in such situation.

    Thank you in advance, I look forward to your response

    with Kind Regards,
    Abi

  37. Andy B sagt:

    Dear Peter,
    I have a quick question: Is the social security tax capped at maximum per month or maximum per year? The reason I ask is, in my case, I may be working in Germany during the last two months of this year and income during those months could be €30,000. Will I pay social security based on a % of the total or will it be based on a % of monthly income cap for social security (e.g. €5400-6400)?

  38. Jeanny sagt:

    Hi Peter,
    I have a question… If someone lived and worked in France from January until October (paying taxes there), then moved permanently to Germany in November where they work from mid November, what income should this person declare in Germany for that year?
    Thank you!

    • Peter Scheller sagt:

      Both:

      November / December ist taxable in Germany

      January – October are taxfree in Germany. However, this income has to be declared because it has an effect on the progressive German tax rate

      See above No. 8

  39. Nicola Paletta sagt:

    Hello Peter,
    many thanks for your effort in providing such precious information.

    I’m Italian and I’m going to move to Germany because I received a job offer from a company of Hamburg.
    I have some questions on how the married status works when a spouse lives and work in Germany, and another lives in Germany (or in another EU Country) but works as an employee for an Italian company. Please could you be so kind to support me?

    Questions are:
    1 – If I work and live in Germany, and my wife work as an employee for an Italian company (earning less than me), is it possible for me to access the tax class 3, with the consequent benefit in terms of taxes?
    2 – I suppose that my wife will pay taxes in Italy, also once she will become a German resident (I saw there is a bilateral agreement between Italy and Germany). Furthermore there is the possibility that my wife will continue to work for the Italian company (as an employee) also when living in Germany. In that case, do I have to declare the income of my wife even if she pays taxes to Italy? How does it affect the tax class and the total amount of taxes to be paid?

    Thank you very much for your precious help!

    • Peter Scheller sagt:

      Hi Nicola,

      We need far more information to provide you with a professional statement. In regard to you wife there are various questions:
      – Is she working in Italy or in Germany only?
      – Is she working in Italy and Germany?
      – If so, is she working for more than 183 days in Germany?

      Please note:
      – Your wife might be liable to German income tax although working for an Italian employer.
      – You will be entitled to tax class III if you wife is tax resident in Germany (What seems to be the case)?
      – You and you wife have to file German income tax returns.
      – Lots of other tax relevant issues have to be considered.

      Just to say it again: Double tax Scenarios are never easy!

      • Nicola Paletta sagt:

        Hello Peter,
        many thanks for your answers.
        My wife works and will work as an employee for an Italian company having its premises in Italy. According to the bilateral agreement between Italy and Germany (an agreement aimed at avoiding double taxations, signed in Bonn in 1989, you can easily find it on the internet), taxes on salaries have to be payed (only) in the Country of the Employer, undependently on your residence. This is the unique thing about which I’m quite sure.
        That said, the question is: if she pays taxes to Italy, can I access tax class 3? I have been trying to find an answer for one month, so far with no success…

  40. Russell sagt:

    Hi Peter,I’m a U.S. Citizen living in Germany. I have no German income. I get Social Security, a private pension, and a little income from publishing royalties from the U.S. Must I pay German taxes on these? Thx

    • Peter Scheller sagt:

      Hi Russel, IT depends on the scale of your income (German and foreign). The socials security payments are not taxable but have an effect on the tax rate. However, you may only be liable to German income tax if your taxable income exceeds an amount of 9,000 Euro.

  41. dan sagt:

    thank you Peter for the info main on your site!

    I have just moved to Germany in September as a relocation. I am still employed in the UK. I am also a director on the uk company. I would like to lay some roots here and perhaps buy a property in 2017
    I would like to know what is the best way for me to organise my tax and status in Germany that reflects well on me when I am ready to purchase.
    Thanks

    • Peter Scheller sagt:

      Hi Dan,

      First of all you have to find out whether you are tax liable with your UK salaries in Germany. See Article 14 (2) Double Taxation Convention Germany / UK:

      „Notwithstanding the provisions of paragraph 1, remuneration
      derived by a resident of a Contracting State in respect of an
      employment exercised in the other Contracting State shall be
      taxable only in the first-mentioned State if:

      a) the recipient is present in the other State for a period or
      periods not exceeding in the aggregate 183 days in any
      twelve month period commencing or ending in the fiscal year
      concerned“

      Many other issues have to be considered. I suppose you need a German tax adviser who is specialized in expats.

  42. Jack sagt:

    Hi Peter

    Question. We rent an apartment in Berlin but also invested in a Berlin new build property. Unsurprisingly this has now been delayed but actually quite significantly, 9 months.

    I currently pay the monthly interest on the amount borrowed from the german bank. As we neither live in the apartment nor rent it out as it is not ready, does it quality for the interest to be offset in anyway?

    Kind regards

  43. Zuzana sagt:

    Hello, I am very happy that you have such a discussion in here and in English 🙂
    I would like to ask you a few questions. I am a student. I study in Germany but i am not German (but I am from EU). Recently it was offered to me to start making cosmetic products for a small company. I found out that the company is registered but they they don’t pay taxes. The owner told me that they just started and their income is so small so i does not make a sense to start Trade Certificate or so on. He was told in a bank that it does not make a sense now to start a business bank account so he uses his private bank account as the company bank account. He told me that if you have a taxnumber you need to have a business bank account and because he was told in a bank that he does not need one, he don’t have taxnumber. Now I dont know what to do. I would love to cooperate with him, however I myself dont have Trade Certificate which I would like to have in a future if the products will be sold nicely. He told me that if something happens it will not happen to me, but I’m not sure about that. What should I do please? I thought about doing some products just once (I heard that you dont have to pay taxes if you do some job just once and not regularly) to see if they will be sold and if yes I would start my own Trade Cerificate. But I dont know what about him, if this would be danger for me that I cooperate with him. Thank you very much!

    • Peter Scheller sagt:

      Hi Zuzana,

      I would be careful. Companies even if very small who do not register with the tax authorities and do not declare anything will be on the radar of the German tax authorities later. In general this results in tax burdens which cannot be paid.

      If this happens you will be on the radar as well.

      You should seek professional advise by a tax adviser before you start any business activities.

  44. Marco sagt:

    Hello,

    Excellent and useful like no others I could find, so thanks for that.

    I’m Italian and moving to Munich from UK where I’ve been working for <3 years. I have an UK ISA, company shares plan, and other not-resident Italian investments (funds and bonds). I do not receive any income from any of these investments as they are of an accumulation type of investments, but this does not hold for Germany as I have understood that any type of dividend will be taxed at 25% instead. I do know I will have to declare them in Germany but is there any tax-efficient way to hold such investments in some form after becoming a Germany resident? Like the analogue of an UK ISA or tax efficient international accounts?

    • Peter Scheller sagt:

      That is one of the most complicated issues in German income tax law regarding capital income. You have to analyse it for every Investment. Without an expirienced tax consultant you will not find a solution.

  45. robert crabtree sagt:

    Hi Peter
    I am now a CEO Geschaeftsfuehrer of a German registered Gmbh. I do not reside in Germany but the UK. I am not registered in Germany as a resident as I only spend very short periods there.
    Must I pay tax on the salary that I will be getting starting in January next year to the German Revenue Service or can I pay it in the UK which would mean less tax? The work I do can be done from anywhere and technically I will only have to go to Germany once a year to sign the audited accounts.
    Best regards
    Rob

  46. Robert sagt:

    Hi Peter
    I am now a CEO Geschaeftsfuehrer of a German registered Gmbh. I do not reside in Germany but the UK. I am not registered in Germany as a resident as I only spend very short periods there.
    Must I pay tax on the salary that I will be getting starting in January next year to the German Revenue Service or can I pay it in the UK which would mean less tax? The work I do can be done from anywhere and technically I will only have to go to Germany once a year to sign the audited accounts.
    Best regards
    Rob

  47. Peter Scheller sagt:

    Hi Rob,

    If you are in Germany for very short periods you will not be liable to German income tax.

    However, if you are the only director of the GmbH there might be a another problem. The place of management of the German corporation is in the UK. Therefore HMRC might consider the GmbH as a UK entity for tax purposes. You should ask you UK adviser if there is be tax problem in the UK.

    Best regards

    Peter

  48. James Browning sagt:

    Hello everyone

    I would like to know if I have to declare rental income in Germany on a UK property when my farther is also on the English mortgage however I filled the NRL1I forms.
    I am not sure if I should tell them here in Germany or not ?

    Thanks

    James

  49. James Brownin sagt:

    Sorry forgot to say I’ve only been here for 6 months so far but will probably be staying over 12 months

    Thanks

  50. Peter Scheller sagt:

    Yes, you have to declare the rental income in Germany.

    However, it is tax free but has an effect on your German income tax rate (on other income).

    See also No. 8 of our article.

  51. Nana jp sagt:

    Hello Peter,
    Thanks a lot for the great information. I’d be grateful if youcan give me some opinion/ advice regarding our case.
    We are expats who moved to Germany almost two years ago. We have three kids and I’m not working. When my husband asked the company for a copy of our tax papers, we found that my his salary is huge on those papers, while what reviled to us in the contract and explanation upon offer was only the net income which is just moderate. We understand that big part of it comes from the school fees of the three kids. But since the company does the taxation process it also does the tax return and we get nothing of it. So school fees and all other tax return goes back to the company. Also we don’t get the chance of filing for tax return on other expenses not paid directly by our employer! And two additional points, in tax class we found that they put us in class 4 while I’m not working. And they also chose the option (Kinderfreibetrag) that takes away our right for Kindergeld but at the same time we benefit nothing from that supposed tax break as it all goes to the company and we just get our basic salary. I understand that we have the advantage of kids‘ school being paid for us, but it feels like we’ve been taken advantage of when our salary looks so big on tax papers, and what goes in our bank account each month is just enough for normal life, not much left for saving let alone a fancy life that that number on papers might imply!
    -Do we have a right to fix the way we are being taxed?
    -Can we file for our tax return ourselves, since a number of our bills don’t go through the company!
    -Can we remove the Kinderfreibetrag in order to be eligible for Kindergeld?
    Thanks for taking the time to read and advise me on our case,
    Wish you a good day

    • Peter Scheller sagt:

      Hi Nana,

      You are always entitled to file your own tax returns. Your employer cannot do that (but he can do the „Lohnsteuerjahresausgleich“).

      You may claim for „Kindergeld“.

      However, you should be careful. You should check what you agreed with your employer. Probably you waived some rights to him.

      I suppose you need a good tax adviser to get yout situation sorted our.

      • Nana jp sagt:

        Thanks a lot Peter for your advice. I think, as you said, we did unknowingly waived many rights to the employer! I hope we will be able to fix it without damage,
        Thanks again

  52. Hilda sagt:

    Halo Peter,

    Thank you for a lot of great information.
    I am Indonesian citizen and I worked in Germany from 2011-mid 2016 and then moved to USA for doing postdoctoral research. Since I am holding a J-1 Visa and worked in Germany before coming to USA, I am exempted from the US federal and state tax for the first two years.
    1. Does this means I would have to pay tax in Germany?
    2. How do you file this tax return in Germany? Is it as foreign income?

    Many thanks for your help.
    Hilda

    • Peter Scheller sagt:

      Hello Hilda,

      Whether you are liable to German income tax depends on your tax status in Germany, see

      http://www.scheller-international.com/1616-2/

      If you are tax resident you have to file income tax returns. Otherweise you don’t have to.

      For 2016 you definitely you have to file a German income tax return. I am pretty sure that you need a tax adviser for that since a lot of things have to be considered.

      • Hilda sagt:

        Hallo Peter,

        thank you for your information. I don’t have any legal rights to stay in Germany anymore and I have de-register from the Rathaus too. I also have no home there. So, I don’t think I am a tax resident in Germany anymore. Am I right?

        Hilda

  53. Laszlo sagt:

    Dear Peter, short question:
    I get divorced during 2015, and my 2 kids were in Hungary with my former wife.
    They visited me during the year during vacation, and every month myself them in Hungary. I am not sure if during the declaration I shall/can mention my kids, or as I was divorced from taxation point of view I should omit, as they were with their mum?
    Many thanks for your advice!
    Laszlo

  54. Peter Scheller sagt:

    It mainly depends on the fact whether you paid for your children or not.

    We need more information in order to give a proper advice on it.

  55. Jerome Koenig sagt:

    Dear Peter,

    I am french citizen moving to Hamburg in February 2017. I am married with one daughter.
    My wife is peruvian and my daughter have french and peruvian passport. My wife (who will have to apply to a family union visa) and kid will stay up to July/August in Peru and then moved in to Hamburg.

    From February to July/August will I be Tax Class I? Tax Class III?

    Thanks for your answer,

    Jerome

    • Peter Scheller sagt:

      In general you are right. However, there is an exemption which depends on the status and the income of you wife.

      However, you are obliged to file an income tax return in Germany for 2017. In this return you may be entitled to claim taxes back. You need to consult with a German tax advisor in order to get this right.

  56. António Neto sagt:

    Dear Peter Scheller
    My daughter, has 20 years old and she is a portuguese professional classic/contemporary dancer in Munich. Since August 2015 she is dancing in a big company, paying taxes and social security and the health insurance like all other dancers of company. Now another german ? company are offering her a new contract for next 2 years, but as a soloist guest and they will be paying her by performances done and other expenses like hotels, travels etc. She must give them an invoice before receiving the fees. She will be the responsible for accounting for her own tax and her own health and travel insurance. In Portugal she must to do register in Tax Authority has self worker and pay to social security, and in Germany?. As father i am very worried about it because i don´t know your taxes law. Can you help me or her? Thank you again, Antonio Neto, Lisbon

  57. Rahul Dipani sagt:

    Hi,

    I am expat working in Frankfurt since 2015 March, I had submitted my return for 2015 in tax class 1. Now I got married in Indian on Dec 2016 (indian marriage certificate) my wife is in India and will be only coming in December 2017. Question:- it is possible to get my tax class changes ? Or can I file double housing expense claim for 2016, money send to wife for her expense and flight expense born by me to meet her.

  58. Angela sagt:

    Hi Peter,

    Can you kindly provide more details about double household tax relief? I will be working for a short-term assignment in Germany starting April 2016 (less than 183 days). What are the criteria to avail of that tax relief?

    Also, what if I stayed in germany for another 2 weeks just for vacation (that would mean my stay in Grrmany would be konger than 183 days), will that affect the double household tax relief availment?

    Thank you so much in advance.

  59. Peter Scheller sagt:

    The double household relief can be claimed by you. See also:

    http://www.scheller-international.com/deductible-expenses-for-work-related-second-household/

  60. Nancy Sachdeva sagt:

    My husband works in one part of Germany Erlangen and I am starting a job in another part of germany, Dusseldorf. We will therefore maintain double house, he will be on rent here and I will be there. I will be travelling to meet him over the weekend, once every week .or once in two weeks. Can I claim double household tax refund?
    Does my employer need to do something?

  61. Mohit sagt:

    Dear Peter, thank you for your great advises and important informations
    I am from India and I was on a non taxable fellowship from Germany for about 5 years during myPhD in Germany. Then I moved to USA as a researcher on J1 VISA. I have an option to claim Germany-USA tax treaty (20(1)) benefit as I was a Germany resident before moving to USA. Now I dont have any residence in Germany and no VISA also to visit Germany. I am deregistered from Rathhaus. My question is if I claim the treaty to get the tax benefit here in USA, do I need to file tax returns in Germany and pay taxes there.
    Many thanks in advance
    MM

    • Peter Scheller sagt:

      You have to file income tax returns in Germany if

      – you are resident in Germany (http://www.scheller-international.com/1616-2/) and
      – you received a certain income

      • Mohit sagt:

        Thank you for the answer. My income is from US federal sources and not from Germany. I am claiming US-Germany tax treaty 20(1) to get exemption from any taxes in USA as I was a resident of Germany before moving here. I do not have any address in Germany any more as I mentioned before and i do not have VISA to visit/work in Germany. Although my permanent address is in USA, I am a non resident alien in USA for tax purpose. Am I still considered as a German resident for the tax purpose as I am claiming the German-USA tax treaty? Sorry to ask the same question again, but I am very confused about the residency for the tax purpose according to the treaty.
        Many thanks

  62. Raymond Smith sagt:

    Dear Peter, I am retired in Germany with uk Pensions both Government and private payments. I have a UK tax advisor and a German Tax advisor. No issues with the UK as they take the tax directly from my private pension at source.

    However, my German Tax advisor states that as the tax rates are higher in Germany I have to pay the extra on my private pension to meet the higher German rates.

    When considering the Dual Tax agreement thats in place are they correct?

    Kind regards

    RS

    • Peter Scheller sagt:

      I have not checked the German/UK treaty. However, it seems possible that you may have to pay taxes in Germany an can credit the UK taxes against the German tax. If the German tax is higher than you may have to pay the difference in Germany.

      If you need a profund advice on this issue I need more information,

  63. Peter Scheller sagt:

    Absolutely impossible to say. I do not know important details (correctness of tax calculations, your tax rate in Germany, other German and foreign income and so on and so on).

    The best way to find that out would be to send me your advisors‘ tax calculations.

  64. Michael W. Brown sagt:

    Hello…I am a US citizen and co-own rental property in Hamburg with a community of heirs. Is there a publication that could explain how taxes are to be paid and what types of deductions are allowed?
    Also, does the double taxation treaty between the US and Germany apply for this type of property ownership and if so which convention?

    Thank you for your help with this matter.

  65. Peter Scheller sagt:

    The US/German treaty applies. You have to pay income tax in Germany. Any reduction of your tax burden should be on the US side.

    More information http://www.scheller-international.com/investment-in-german-real-estate/

  66. Radivoj Djokic sagt:

    Dear Peter,

    I am a non EU citizen form Serbia expecting EU Blue Card visa. My wife will also move with me but will not be working for some time in order to learn German. Can you please provide us with the information about tax category that would be applied as it will make big difference for us (Category I vs III).

    Regards
    R

  67. Rick sagt:

    Hi Peter,

    I live in Singapore in a country with low tax rate. My wife and children intent to move back to Germany (will not work) whereas I will continue to stay in Asia for some time. I hear that under these circumstances (though DTA in place) it is required to pay tax in Singapore but on top as well in Germany (regulation change last year)? Does it make a difference if she would register in Germany or not ?

  68. menschlich sagt:

    Dear Peter,

    I am a U.S. citizen. My wife is German and we own a home in Bavaria.

    I am a retired US Army Officer and will be soon retiring as a civilian employee of the U.S. Department of Defense. I will receive a pension from both and believe, per the U.S. German tax treaty, that those fixed pensions will be taxed in the U.S. I also receive disability compensation based on military service connected disabilities from the U.S Department of Veteran Affairs. I will also receive U.S. Social Security and my wife will receive U.S. Social Security based on our being married. She never worked in the U.S.

    I will be retiring in Germany

    My question is about tax treatment of the U.S. Thrift Savings Plan (TSP). This is an IRA plan that invests in various stock and bond funds. It is part of my overall U.S government retirement plan. The portion of my pay that was invested into the TSP plans was not subject to US income tax. I can no longer deposit money in this account once I am retired.

    When I take a distribution from this account it will be taxed in the U.S. as income—How will the German government treat these distributions?

  69. Steven sagt:

    Dear Peter,
    I am interested in knowing how Australian industry superannuation retirement income streams (allocated pensions), which are non assessable non exempt income in Australia would be treated in Germany. The Australian government encourages retirees to take these pensions in order to reduce reliance on the government funded social security aged pension. After the age of 60 you are not taxed on the income or earnings.

    Millions of Australian workers contribute to these funds.
    http://www.industrysuper.com/retirement-info/income-streams/

    The particular pension income stream I have is detailed here:
    https://www.australiansuper.com/retirement/retire-with-australiansuper/choice-income.aspx

    I am 61 and will be 62 this July.

    If deemed a resident of Germany for tax purposes would my pension income be treated as a capital investment and taxed at the rate of 26.375% (including solidarity tax) on the earnings?

    I plan to spend up to 12 months from May this year with my German girlfriend who needs to be in Germany for work and family commitments. For me this is an extended holiday now that I have retired. My family home is in Australia and will remain vacant for the period I am away. During the 12 months I will be renting a small apartment in Germany. In order for me to spend more than 3 months in Germany I will need to apply for a temporary residence permit. From what I have read I will be considered a resident for tax purposes if I spend more than 183 days in Germany.

    The allocated pension mentioned above is my only source of income other than a small amount of interest from a bank savings account.

  70. Steven sagt:

    Dear Peter
    Further to my previous message:
    I have been advised by the Australian Tax Office that I would need to apply for a certificate of residency.
    https://www.ato.gov.au/individuals/international-tax-for-individuals/in-detail/residency/certificates-of-residency-or-status/?

    This will take approximately 28 days to receive.

    I will be in Germany from 15 May 2017 to approximately 15 February 2018 on an extended holiday with my girlfriend who is a German national. As mentioned previously for stays longer than 3 months I need to apply for a 12 month temporary resident permit, have German healthcare coverage and an address in Germany.

    I will be taking out 12 month healthcare and liability insurance for foreign guests with Hanser Merkur. I will be staying with friends till 1 July and then renting an apartment for the rest of my of my stay in Germany.

    At what point in time would I need to apply for the Australian certificate of residency and provide that to the German authorities?

    Kind regards

  71. Santhosh sagt:

    Dear Peter,

    I am living in Germany since 4 year. Last year i got married and my wife relocated to Germany.
    1. Can i apply for relocation charges in the tax
    2. During the stay outside Germany, can i also show the financial support to my wife in the tax claim?
    3. Are my flight travel to meet my wife before marriage in the same financial year also covered to claim?

    Regards
    Santhosh

  72. Peter Scheller sagt:

    No. 1: Only if it job- or business-related
    No. 2: This needs much more information and is subject to a professional advice.
    No. 3: In general no (except job- or business related)

  73. Susan sagt:

    Hello Peter!
    I’ve just discovered this website and am thrilled, as I have many questions in this field!
    My husband and I live in Berlin (I’m American, he is British), but he has a job in Austria. We have 2 small children. At the moment we are commuting between both countries, but it’s getting complicated with Anmeldungen because of the kids who are in 2 different kindergartens (one in Berlin, one in Salzburg), we want to buy a car, insurance, etc..
    I am selbständig, but also a member of a GbR in Germany, and we are wondering whether it would work and be beneficial for me to be registered in Germany, and for he to be in Austria. He is festgestellt in Austria. Oh and we own property in Berlin.
    I earn about a third less than he does.
    Does it make financial sense to have 2 tax bases?
    Thank you for ANY information you or anyone can provide!!
    M

  74. Bobby sagt:

    Hello,

    I have dual citizenship, but this is my first time I’ve worked in Germany. I submitted the tax return via the Steuer go website.

    Do I now need to mail a physical signed copy also to Germany?

  75. Ina sagt:

    Dear Peter,

    we have a situation where a company is about to be wound up in Australia (voluntarily liquidated). The company is going to pay a final dividend to its 3 shareholders (one of which will become a German resident from 15 July 2017) with franking credits attached (30%). The dividend will be paid on 1 July 2017.
    Another payment will be return of paid up capital, which will not be subject to any tax.
    Also a final payment will be made from company account, which originated before 1985. For your information, there is no capital gains tax in Australia on assets owned prior to Sep 1985. Therefore in Australia, this payment will be ignored when it comes to tax.

    Our questions are, how does Germany treat liquidation of a company proceeds.

    1. If the shareholder, who will become German resident from 15 July 2017, receives a fully franked dividend from an Australian company (private/unlisted) on 1 July 2017 (Dividend is eg. $100k, ($70k received, $30k tax paid)) would they have to declare it in their 2017 German tax return? And if yes, how much of the $30k of foreign tax credits will be used for tax purposes in Germany?

    2. How would the proceeds received, which related to pre Sep 1985, be treated in Germany? If they are non-taxable in Australia, would they be taxed in Germany?
    Assuming the payment is also made on 1 July 2017, prior to the individual becoming a resident of Germany.

    Alternatively, if the payment was made after 15 July 2017, how would it be treated under the German tax law?

    I look forward to your prompt response.

    Your help is very much appreciated.

    Kind regards,

    Ina

  76. Peter Scheller sagt:

    Hi Ina, this requires a proper analysis and advice. If you need my support just contact me by e-mail. Peter

  77. Chris E sagt:

    Dear Peter,

    Thank you for your great post. I do have however another question in regards to expenses related to traveling back to Heimland or family. (As you may understand I am expat living in Germany for 2 years now). More specifically, I have been told tax can be reimbursed if I travelled to see family in home country.

    Does this clause apply only I declare a double house hold or is there any other place where I can declare this ?

    Thank you so much for your help.

    Regards,
    Chris.

  78. Ferhad Patel sagt:

    Hello Peter,
    I work in Germany (1st Jan’17 – 31st May’17) and relocating to Asia . What’s my tax liabilities in Germany ? Do I need to declare income earned in Asia post my departure from Germany and pay taxes on that income ?

    • Peter Scheller sagt:

      Whether you are tax liable in Germany and what you have to declare is not that easy to say. It mainly depends on the terms you worked in Germany:

      – Who was the employer?
      – Did you work under an assignment contract in Germany?
      – Did you have two residencies?
      – Do you have a family and where was it located?
      – and other issues

      Cases like this have to be checked by a German tax consultant.

  79. Feroz Zaidi sagt:

    Dear Peter,

    I am married and have a wife and 3 children. My wife is a home-maker and the children are still studying. I was working in India and in December 2016 I was asked to relocate to Germany by my Indian employer. While my wife and 3 children stayed back in India, I moved to Germany on 5th February 2017 where I joined the German entity and became their employee from this date. I started receiving a salary in Euros and got my residence status in Germany and the income tax Steuernummer. Since then I have been paying all income tax, social security, health insurance and unemployment insurance in Germany. I have been classified in Steuerklasse 1.

    I had travelled from germany to India for 2 weeks in Feb- March 2017 on official work.

    Now my contract in Germany has been terminated and I have been told to move back to India and rejoin the Indian entity from 1st August 2017.

    My actual stay in Germany has been from 5th Feb 2017 to 31st July 2017 and in this period I was for 2 weeks in India in Feb – March 2017.

    Since February 2017 I have been maintaining the household expenses of my family and every month I have been sending them Euros from my German salary. My wife has been paying rent in India and I have been paying rent in Germany. My questions are:

    1. What refund can I get on the income tax and social security that I have paid in Germany?

    2. My monthly rent in Munich is EUR 900 per month and my family also pays rent in India. Can I get a benefit in my income tax for EUR 900 for each month?

    3. As I am maintaining two households, can I get benefit in my income tax for the money that i send each month to my family in India.

    4. What are the other benefits that I can claim?

    I will be very grateful if you could share your expert advice on this matter.

    Warm regards,
    Feroz Zaidi

    • Peter Scheller sagt:

      You are asking for a proper tax advice of a German tax consultant. This professional needs far more Information. I am sure that this case is not meant to be discussed in an open forum.

  80. Roy Van Wynsberghe sagt:

    Hello Peter,
    I am a US American citizen and my wife and childre are dual citizens of the US and Germany. We are moving to Germany later this year. I have tried to research how American 401k and IRA accounts will be treated by the German Tax Authorities. We don’t wish to keep contributing to them but need to understand the tax implications of holding the accounts. We are interested in proper tax advice.

    Thanks for any help you can provide.

    Sincerely,
    Roy Van Wynsberghe

  81. Owen sagt:

    Greetings,

    As a non-resident living in Germany I think I have a handle on my tax liability in Ireland for rental income.My understanding is that my earned income in Germany does not influence the tax rate calculated in Ireland for my rental income.

    However, do you have any advice how tax is dealt with in the country of residence. I am aware that Ireland has many Double Taxation Agreements with other countries (including Germany). After some reading I believe that my rental income from Ireland is not taxed in Germany, but it does increase my tax rate. Is this something that you would have any advice on?

    Thank you in advance!

    • Peter Scheller sagt:

      I suppose that you are tax resident in Germany (see also http://www.scheller-international.com/1616-2/)

      Your assumtion is absolutely correct. The rental income will not be taxed in Germany but it will have an effect on your German income tax rate.

      Please note that your Irish rental income has to be declared in your German income tax return. The rental income will be calculated following German regulations. This means that the profit declared in Ireland and in Germany may be different. Often this is to your advantage since German regulations allow higher deductions (expenses, general allowances) than most other countries.

      See also No. 2 of the following article:
      http://www.scheller-international.com/investment-in-german-real-estate/

      • Owen sagt:

        Hi Peter,

        Many thanks for your response.
        Would you have an simple numbers example how this might work. I find it hard to understand how I won’t be taxed in Germany for my rental income but at the same time it would increase my tax rate.

        When you say it may be to my advantage, do you mean that my tax rate would be overall lower in the end?

        Thanks again for your contribution.

        • Peter Scheller sagt:

          Your irish income is taxfree in Germanyand will inceases your German tax rate. However, this is only of signifcance if you have any income which is taxable in Germany (e.g. salary).

  82. Sandra Gusic sagt:

    Hallo Peter,
    This website is great. Thankyou. But I do need further advice.

    I have moved to Germany to work last year.
    I live with my German partner.
    My two teenage daughters, whom I have shared custody with their Father. Stayed in Canada to finish high school in English. They are 15 and 16.
    The Girls live with MY PARENTS 80%, spending only every second weekend with their Father.
    I send 500Euro per month through the bank, with documentation, to my mother for their care.

    I filed a tax return for 2016 in Canada and Germany.

    My questions are:
    1) how can I get the girls SOMEHOW registered or recognised here, that I have and care for two children.
    2) my German tax professional said I could not claim them.
    3) my health insurance CO. Said I could not claim them.( this is important also, so when they visit, like every summer, if they are I’ll, I can stay home and my insurance will cover my wage )
    4) my employer said I could not claim them Karyl they had German papers.
    5) I was told I couldn’t get German papers unless they attend school here( which they won’t until university )
    6) I understand I am not eligible for kinder geld, that’s logical….but tax relief and health insurance, if I’m willing to pay for the health insurance, I’d like to get?!
    7) help getting my children some kind if German papers, would be fantastic …. currently, they visit Germany 60+ days yearly, on school breaks.

    Your help is greatly appreciated….

    If I can somehow hire you to help me get my children and tax situation settled, I would love this! Just tell me how.

    Gratefully
    Sandy

  83. Karen sagt:

    Hello Peter, I am 60 years old and plan to retire in Germany. I am a German citizen but came to the US as a child so I have never worked in Germany. I’m not sure how to handle such as collecting social security from the US and how best to transfer my 401K.

    • Peter Scheller sagt:

      Hello Karen,

      I am not absoutely sure whether US authorities transfer pensions abroad (doubtful). I suppose you have to keep a bank account in the US and transfer the money to Germany.

      Please note that the transfer of larger amounts have to be reported (Money laundering regulations).

      Concerning you questions in regard to German taxation you will need a proper tax advice. If you do not have a German tax adviser please feel free to contact me.

      Best regards

      Peter

  84. Peter Rosenberg sagt:

    I am thinking of moving back to Germany after a working life in Britain.
    The two questions are (1) since I am an old age pensioner as is my wife, do I get a tax allowance in Germany and (2) Are pensions treated at a special rate.

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