Income tax return still pending from Dubai
December 17, 2014 | 35,00 EUR | answered by StB Patrick Färber
Hello,
I am currently working and living in Dubai (since 1.7.2014) with an employment contract from the local company of the company. Before my stay in Dubai, I lived in Switzerland for over 2 years.
I plan to return to Germany in 2015. How does my income tax liability in Germany behave if I:
1.:
- return to Germany on 1.4.
- return to Germany on 1.8.
- return to Germany on 31.12.
Do I have to pay tax on my total income as well as allowances for accommodation and car in Germany, or is this amount only taken into account for the progression clause?
In the latter case, for my understanding, this would mean that I would pay higher taxes in my new job for the rest of the year, but my previously earned income would be essentially tax-free. Is this correct?
2.:
What does it mean in the DBA with the UAE that the 183-day rule is not applied but rather a stay within the last 12 months? Does this mean that at the time of the tax return, I must show a stay in the UAE in the last 12 months (no matter how long)?
3.:
What happens to possessions that I bring as household goods to Germany, e.g. a car (registered to me since 6.8.2014), if I go to Germany on 1.4.? Will my stay in Switzerland be taken into account here?
Thank you.
Dear inquirer,
I can answer your questions based on the information provided as follows:
Firstly, with the UAE-Germany double taxation agreement, the so-called credit method applies for non-self-employed income. Therefore, if you establish a residence in Germany and continue to receive salary from Dubai, it will be fully taxed in Germany.
However, I understand your question to be about resigning from your employment with the local company (termination) and then taking up a new non-self-employed job in Germany. In this case:
Question 1): When starting and earning non-self-employed income in Germany on 1.4. and 1.8., the income from the UAE will be taken into account through the progression clause for the remaining period (mid-year relocation).
This can be avoided if you make the move by 31.12. Therefore, if possible, always return or relocate at the end of the year.
Question 2): The background/relevance of the question is unclear to me. The 183-day rule applies only in cases of secondment (living in one country, working in another), which does not seem to be the case here according to the information provided. You work X days in Dubai for an employer there, and then you come to Germany and work for an employer X days here. There is no "connection" between the two.
The stay in the last 12 months means that it is not the tax year of the country, but the last 12 months may be considered across years. However, in your case, it seems irrelevant based on the information provided.
Question 3): What is the background of the question regarding the duration of ownership? Are you referring to a customs regulation? There is no tax credit for previous stays when returning. (Theoretically, there could be an aggregation of years in Switzerland and the UAE in connection with § 2 AStG or § 4 Abs. 4 DBA CH (exit taxation to a low-tax country). However, this is no longer relevant with the return to Germany.
I hope this answers your questions and provides sufficient planning security.
Best regards,
Patrick Färber, StB
post@richtig-gegensteuern.de
