Unlimited tax liability if 100% of income is in Germany
April 18, 2011 | 30,00 EUR | answered by Michael Herrmann
Dear Sir or Madam,
I am married and have my main place of residence in Austria (30km from the German/Austrian border). My wife receives a disability pension from the Austrian pension fund. I commute to my employer in Germany every day, where I earn my income from employment. Additionally, I work as a freelance lecturer at a community college in Germany. Since I earn 100% of my income in Germany, I should be considered as having unlimited tax liability in Germany. According to my research and discussions with an Austrian tax advisor, I would need to fill out an application for unlimited tax liability in Germany. "Application for treatment as an unrestricted income taxpayer according to § 1 para. 3, § 1a Income Tax Act". I want to pay taxes in Germany. Is this possible with this argumentation?
Thank you.
Dear inquirer,
First of all, thank you for your inquiry, which I would like to answer based on the information provided and in the context of your initial consultation. The response is based on the description of the situation. Missing or incorrect information about the actual circumstances can affect the legal outcome.
Natural persons are treated as unlimited tax residents under the following conditions (fictional unlimited tax residency):
Application,
no residence or habitual abode in the country,
Income subject to at least 90% of German income tax or
income not subject to German income tax does not exceed the basic tax-free allowance of income in § 32a para. 1 sentence 2 No. 1 EStG (up to 31.12.2007: no more than €6,136),
income not subject to German income tax is proven by a certificate from the competent foreign tax authority.
When determining income, income not subject to German taxation and not taxed abroad shall not be taken into account to the extent that comparable income is tax-free in the country. Tax liability only applies to domestic income as per § 49 EStG.
Fictional unlimited tax residency can be advantageous, as unlike limited tax residency, special expenses, extraordinary burdens, allowances, and other benefits can be taken into account during assessment.
I hope that these details have provided you with an adequate overview of the situation in the context of your consultation, and remain
Yours sincerely,
Michael Herrmann
Graduate Financial Economist (FH)
Tax consultant
