Moving Place of Residence and Place of Employment

If you move your place of residence and place of employment – whether it’s from somewhere abroad back to your native country or from your native country to a destination abroad – there are some tax problems you might have to deal with. Here we offer you some insights of the consequences regarding your changing tax situation.

Moving place of residence and place of employment
from abroad back to home country (inbound) or
from home country to a destination abroad (outbound)

The trend to globalization does not just expand international operations of many companies, it increases international activities of employees as well. If an employee lives and works in Germany for the first half of the year then changes place of residence and place of employment to a destination abroad, the following questions will come up:

– What are the tax obligations and where must they be fulfilled?
– How much of the wages are taxable, and where?
– What expenses can be deducted, and where?

Regardless whether the employee is leaving Germany or moving to Germany it is necessary to file two income tax returns in the year of transition, one in Germany and one in the foreign country. Germany has concluded Double Taxation Treaties with many other nations. The treaties usually provide that wages earned in Germany are taxable in Germany, wages earned in foreign countries are taxable there, but the amount of foreign income is taken into consideration to calculate the tax rate applicable to German income.

The specific regulations vary for different nations. Some special regulations just apply to certain kinds of employees (e.g. public servants, senior managers and managing directors of limited companies, teachers and professors, etc.) or to special kinds of payments (e.g. settlements, bonuses, pensions, etc.).

The international tax landscape can be complex to navigate on your own. Contact us and we’ll be pleased to recommend the best solution for your circumstances and help you minimize your tax liability.