Ask a tax advisor on the topic of Double taxation

Income tax calculation when moving to Austria during the year.

February 5, 2013 | 40,00 EUR | answered by Michael Herrmann

Income tax calculation for "short year" after moving from Germany (D) to Austria (A)/previous inquiry to Mr. Hintz

We (married couple, I self-employed, my wife employed by me) will move our main residence to Austria on 1st of April 2014. Therefore, we are still subject to income tax in Germany in the 1st quarter of 2014. However, an unexpected tax burden has arisen in 2013 from the sale of investments (closed-end funds). Therefore, I will try to shift the income from my self-employment, which will also be terminated in Germany on 1st of April 2014, to the beginning of 2014 as much as possible.

My question is: How is the income tax calculated for the first quarter of 2014, during which I am still fully liable to pay income tax in Germany? Will the taxable amount be determined as if it had been earned over the entire year, or even quadrupled (fictional projection for 2014)? Can Rürup contributions still be made tax-effectively proportionately for the quarter or the entire year?
Other income from D, for which we are still partially liable for tax in 2014, will then be taxed from 1st of April 2014 without the application of the previous splitting rule. Will a tax return for April to December 2014 in D be necessary for each of us then? This would require 3 tax returns for D and 2 for A in 2014.

In Austria, only minor income from self-employment, as well as capital gains and rental income, will accrue for quarters II-IV in 2014, which as per my information are supposed to be taxed separately for each individual in a tax return for A anyway.
For later pension payments starting from 2016 (self) and 2017 (wife), Germany retains the limited taxation rights.
The progression clause for A on these pension payments is still applied, but is apparently controversial in terms of EU law. Are you aware of any legal developments in this regard?

Best regards!

Michael Herrmann

Dear inquirer,

First of all, thank you for your inquiry, which I would be happy to answer based on the information provided and in the context of your initial consultation. The response is based on the facts presented. Missing or incorrect information about the actual circumstances can affect the legal outcome.

Due to the change of residence in 2014, you are only partially subject to unlimited tax liability in that year. Since income tax is an annual tax, only one tax return needs to be filed. This tax return is mostly similar to the tax return for individuals with foreign income who are subject to unlimited tax liability for the entire year.

All actual domestic income will be taxed as usual. Austrian income will be declared for consideration in the progression clause. Estimates are not made. Rürup contributions are fully recognized in full. There is no reduction for the months of limited tax liability. The basic tax allowance and the splitting tariff are granted in full and for the entire year.

Subsequent pension payments in Germany, to the extent that they are paid by the German pension insurance, are subject to limited tax liability.

As a German tax advisor, I cannot provide information on the circumstances in Austria.

I hope that these details have given you a sufficient overview of the situation in the context of your inquiry and initial consultation.

Best regards,

Michael Herrmann
Dipl.-Finanzwirt (FH)
Tax advisor