Can spouses be taxed in different countries in France?
December 15, 2009 | 50,00 EUR | answered by Matthias Wander
Tax advice for a planned secondment to France
My wife is being seconded to France as an employee. We want to move our main residence to France. The employer will cover part of the rent and the moving costs. We are married and have no children.
I am self-employed exclusively in Germany. My home office is currently located in our shared residence in Germany.
I own a rental property as an investment, which generates negative income that currently reduces the income tax burden in Germany.
Both of us are subject to the highest tax rate in Germany.
1. Is joint taxation of both incomes in France mandatory? Is it perhaps even advisable, as the tax burden in France is significantly lower?
2. Or is separate assessment (my wife in France, myself in Germany) possible, which would still allow me to offset the negative rental income in Germany against my positive income?
3. Does my main residence need to be in Germany for this purpose, or would a secondary residence or setting up a business location by renting an office suffice?
4. Can I continue to deduct travel expenses from France to Germany as business expenses?
Thank you, kind regards!
Dear questioner,
Thank you for your inquiry, which I would like to answer based on your information in the context of an initial consultation.
Unlimited tax liability exists if there is a residence in Germany. It does not matter whether it is a main or secondary residence. Those who do not have a residence in Germany but generate domestic income are subject to limited tax liability in Germany.
In case of unlimited tax liability, the following applies:
According to the DBA France, income from employment in France is to be taxed, unless your wife does not stay in France for more than 183 days and the compensation is paid by a company based in Germany. If this income is tax-free in Germany, it is subject to progression clause.
It goes without saying that income from your freelance work and rental income in Germany is taxed.
In addition, special expenses, extraordinary burdens, splitting tariff, etc. can be taken into account.
Joint assessment is more advantageous than individual assessment. Joint assessment is also possible if the spouse has a residence in an EU country.
In case of limited tax liability, the following applies:
Only domestic income is taxed in Germany. Tax benefits, such as special expenses, extraordinary burdens or splitting tariff, are not granted.
Travel expenses from France to Germany can be deducted as business expenses.
Considering only the amount of German tax, having a residence in Germany and joint assessment will be the more favorable option. Unfortunately, I cannot provide information on the amount of French tax.
I hope this gives you a first overview.
Best regards,
Wander
Tax consultant
