What are the tax implications of staying abroad?
September 18, 2022 | 50,00 EUR | answered by Lilli Reuter
Dear Sir or Madam,
My name is Christine Neumann and I have a question regarding the tax consequences of staying abroad. I am planning to go abroad for a year to work there. Now I am thinking about how my stay will affect my taxes and what steps I may need to take to avoid tax problems.
Currently, I am liable for tax in Germany and work here as an employee. My salary is taxed monthly and I regularly submit my income tax return. Since I have never worked abroad before, I am unsure how my stay abroad will affect my tax liability in Germany. Are there specific deadlines I need to adhere to? Do I need to fill out my tax return differently if I work abroad?
Furthermore, I wonder if I may also be liable for tax in the country where I will be working and how this may affect my tax burden. Do I need to submit a tax return there and how will my income be taxed there? Are there double taxation agreements that could help me avoid double taxation?
In addition, I am thinking about my return to Germany and the possible tax consequences associated with it. Do I need to provide certain documents to prove my tax liability in Germany? Are there ways to optimize my tax burden when I return from abroad?
I would greatly appreciate it if you could help me and provide possible solutions to clarify my tax matters during my stay abroad.
Yours sincerely,
Christine Neumann
Dear Mrs. Neumann,
Thank you for your inquiry regarding the tax consequences of living abroad. It is understandable that you are concerned about your tax obligations in Germany and abroad, and how your stay will affect your tax situation.
First and foremost, it is important to know that as a German citizen, you are still liable for taxes in Germany even if you are working abroad. The duration of your stay abroad plays a crucial role in this. If you spend less than 183 days abroad and continue to have a center of life in Germany, you will generally remain taxable in Germany. In this case, you will need to declare your income from abroad in your German tax return.
However, there are certain deadlines you must adhere to when working abroad. Firstly, you should find out in advance whether the country where you will be working has a double taxation agreement with Germany. These agreements determine which country you must pay taxes to on which part of your income in order to avoid double taxation. It is important that you familiarize yourself with the tax regulations in the respective country and, if necessary, file a tax return.
When you return to Germany, you will need to declare your income from abroad in your German tax return. You may also need to provide documents to prove your tax liability in Germany. However, there are also ways to optimize your tax burden when returning from abroad. It may be advisable to contact a tax advisor or lawyer specializing in tax law early on to clarify your tax matters.
Overall, it is important to inform yourself early on about the tax consequences of living abroad and, if necessary, seek professional help to avoid tax issues. I hope this information is helpful to you and I am available for further questions.
Sincerely,
Lilli Reuter
