Income tax in Austria/Germany
December 27, 2009 | 20,00 EUR | answered by Oliver Burchardt
I am a German citizen, have taken up an academic position at a university in Austria, and receive 14 monthly salaries. I am separated and will soon be divorced. According to my current information, I am taxable in Germany as long as I have a secondary or primary residence in Germany, subject to the double taxation agreement, and obliged to submit a tax return in Germany. Is this correct?
From a tax perspective, what is more advantageous as a divorced/(re)married individual: maintaining a residence in Germany permanently or giving up all residences in Germany and relocating entirely to Austria?
Dear inquirer,
thank you for your inquiry, which I would like to answer as part of an initial consultation.
Please note that the tax assessment is based on the description of the facts. Adding, omitting, or changing information may affect the tax assessment.
The taxation of income from dependent work is governed by the Double Taxation Agreement (DTA) between the Federal Republic of Germany and the Republic of Austria.
Article 15(1) states that in principle, the right to tax lies in the so-called residence state. However, this taxation right is immediately restricted in Article 15(2), which states that the residence state may not tax if the employer is resident in the other state.
These admittedly cumbersome formulations are to be interpreted as follows in your case:
Since your employer is undoubtedly resident in Austria, you are subject to taxation in Austria alone according to Article 15(2) of the DTA.
If you still maintain a residence in Germany, you are also required to file an income tax return in Germany. However, the income from your activities in Austria is not subject to taxation in Germany, and filing the return has no tax impact on your income tax in Germany.
Due to this regulation, it has no tax implications whether you completely give up your residence in Germany or not, as the taxation right is completely assigned to the Republic of Austria. This only applies as long as you do not earn any income in Germany.
In your case, however, Article 20 of the DTA could also apply. This provision applies to guest professors who teach at the invitation of a university in Austria but receive their salaries from Germany. If this applies to you, you remain subject to unlimited taxation in Germany.
I hope my explanations have been helpful to you.
Kind regards,
Oliver Burchardt
Certified Public Accountant
Tax Consultant
