Globalisation means that not only companies but also employees are increasingly working internationally. The following questions regularly arise:
- Where is employment income taxed?
- How can tax disadvantages be avoided?
- Can the situation be used to minimise personal tax liabilities?
Mr Averbeck from Munster works for a Dutch employer in Amsterdam. His family has remained in Munster because of the children's schooling. Mr Averbeck travels home every weekend and was able to agree with his employer that he may work from home every Friday. He also regularly travels outside the Netherlands on business trips.
Although Mr Averbeck is subject to unlimited income tax liability in Germany by virtue of his residence in Munster, his employment income is taxed in the Netherlands pursuant to Article 10 of the double taxation agreement between the Netherlands and Germany, since he works there for a Dutch employer. This applies, however, only to the extent that he carries out his work in the Netherlands. To the extent that he works in Germany or in countries other than the Netherlands, the right to tax remains with Germany.
In 2016, Mr Averbeck worked a total of 220 working days, of which 44 days at home in Munster and 22 days on business trips outside the Netherlands. His salary of 100,000.00 euros is therefore apportioned: 30% (66 days / 220 days = 30%) = 30,000.00 euros is taxable in Germany, 70,000.00 euros in the Netherlands. For the 30,000.00 euros he saves the Dutch top rate of tax, currently 52%, whereas the burden in Germany - even taking the progression clause (Progressionsvorbehalt) into account - amounts to at most 44.31% (income tax plus solidarity surcharge). He therefore saves at least 2,300.00 euros.
We are happy to explain how the salary split works in detail and what needs to be observed.