Double taxation agreement
December 10, 2011 | 30,00 EUR | answered by Dipl.BW/SB Ulrich Stiller
Live, reside (with family) and work in the UAE. I am German and also have a residence (house) in Germany. I work for a German company, and my salary has not been taxed by the UAE until now. Now, with the Double Taxation Agreement (DBA), the situation has changed.
Due to the DBA, I have to give up my residence in Germany, which I have done. My salary will be transferred from Germany to the UAE.
1. Does this mean my salary is tax-free?
2. For the last three years, I had tax-free salary - will this be retroactively applied for the last 3 years with the DBA with the UAE?
Thank you.
Dear inquirer,
Thank you for your inquiry, which I would like to answer based on your information and in the context of your situation in a first consultation as follows:
You are only considered tax resident in Germany regarding income in the UAE if you do not have a residence or habitual abode in Germany. By moving to the UAE, you no longer have a habitual abode (which is a continuous stay of more than 6 months) in Germany. You have only given up your residence if you no longer have a place to live in Germany. Deregistering from Germany alone is not sufficient, as registration regulations do not play a role in determining residence. If you keep the apartment and only deregistered in terms of registration law, then you still have a residence in Germany!
From the point at which you no longer have a residence or habitual abode in Germany, you are no longer subject to unlimited tax liability in Germany. This does not apply to the past.
Until now, you had tax-free income according to the ATE. With the new Double Taxation Agreement, the tax exemption will retrospectively cease from 1.1.2009. Your income until 31.12.2008 is still tax-free. For 2009, I would rely on the protection of legitimate expectations on the old regulation, as the DBA was concluded on 01.07.2010 with retroactive effect from 1.1.2009. If you were already tax-free under the ATE before 1.1.2009, you should try to rely on the protection of legitimate expectations on the old regulation with the tax office.
If you had a residence in Germany in 2010, you must definitely declare and pay taxes on the income from the UAE in Germany.
I hope I could assist you.
Sincerely,
Ulrich Stiller
Tax Advisor/Diploma in Business Administration
