Source: https://www.euraxess.de/germany/information-assistance/taxation
Timestamp: 2017-04-26 15:52:26
Document Index: 618200098

Matched Legal Cases: ['§ 1', '§ 49', '§ 34', '§ 1', '§ 49', '§ 1', '§ 49', '§ 32', '§ 8']

Pursuant to §§ 1 para. 4, § 49 para. 1 no. 4a of the income tax act, foreign employees working in Germany may even be subject to limited income tax liability if they do not have a domicile or habitual abode in Germany.
Unilateral tax relief regulations exist (§§ 34c, 34d Income Tax Act) to avoid overlaps in the tax claims by different countries of a taxable person. They are based on the principle of taxpaying ability whereby no distinction may be made under the aspect of equality of taxation whether income is earned and must be taxed solely in Germany, or involves foreign remuneration.
Additionally, Germany has concluded (bilateral) double taxation agreements with most countries that regulate which country waives the tax due according to the national legislation. The double taxation agreements do not substantiate any tax liability; rather they merely determine or limit the right to taxation.
Details on tax exemption on fellowships in Germany.
Pursuant to § 1 para. 4 of the income tax act, if you do not have your domicile or habitual abode in Germany, you are subject to limited income tax liability if you earn income in Germany from permanent or temporary dependent employment in the sense of § 49 of the Income Tax Act. While personal tax concessions mostly do not exist, it is possible to limit the German right of taxation due to a double taxation agreement with your home country.
Natural persons without a domicile or habitual abode in Germany in permanent dependent employment in Germany are also able to select the option of § 1 para. 3 of the Income Tax Act and, upon application, request for their income earned in Germany in the sense of § 49 of the Income Tax Act to be deemed (fictively) liable to income tax in Germany – with simultaneous unlimited income tax liability abroad. This allows tax concessions and exemptions to be taken advantage of and can therefore be more advantageous, as taxation then corresponds more with the principle of subjective taxpaying ability.
The condition for an application is either that 90% of all income is subject to German income tax, or that the income subject to foreign taxation does not exceed the basic exemption allowance ("Grundfreibetrag"), which is currently set at 8.652 EUR (§ 32a para. 1 sentence 2 No. 1 Income Tax Act), and confirmation is provided by the foreign tax authorities of the total income taxable abroad.
If you choose to have your domicile or habitual abode in Germany while in dependent employment and members of your family remain in your home country, you are subject to unlimited income tax liability both abroad and in Germany for the entire year. The taxation rights of each country are offset in the pertinent double taxation agreement. In case of employment in Germany based on a German employment contract, a domicile or habitual abode in the sense of the tax legislation (§§ 8, 9 General Fiscal Code) regularly occurs. An employee is also able to have several residences.
The tax due is deducted from your salary immediately and transferred to the tax authorities by your employer as so-called wage tax ("Lohnsteuer").
Texts of the double taxation agreements concluded by the Federal Republic of Germany as well as other state-related publicationsFederal Ministry of Finance
Lists of local tax offices (in German)Federal Finance Office
Search for tax accountants in Germany, Europe and worldwide amongst other things by area of expertise (for instance "income tax") and by country on whose tax law the adviser is specialisedGerman Association of Tax Advisers