Ask a tax advisor on the topic of Double taxation

Progression clause for separately assessed spouses

December 1, 2011 | 30,00 EUR | answered by Dipl.BW/SB Ulrich Stiller

I live in Germany, do not earn any income in Germany. Since 2012, I have a second residence in Bulgaria and am a shareholder/director of a sole proprietorship company (EOOD) there, receiving no salary, only withdrawing profits that are taxed in Bulgaria. I have a local procurator in Bulgaria and do not spend the majority of my time there.
My wife lives and works in Germany all year round. We file taxes separately.
When determining my wife's tax rate for separate filing, will my Bulgarian income be included? If so, how can this be avoided?

Dipl.BW/SB Ulrich Stiller

Dear inquirer,

Thank you for your inquiry, which I would like to answer as follows within the scope of an initial consultation:

According to § 26a (1) of the Income Tax Act, in the case of separate assessment of spouses, EACH spouse's income is to be attributed to them.

Applied to you and your wife, this means: In the case of separate assessment, only your wife's own income will be included in her income tax return. The income of you as the husband will NOT be included in the wife's income tax return.

This means that your Bulgarian income will NOT be taken into account in the income tax return of your wife when calculating the tax rates (progression clause) in the case of separate assessment.

I hope this information was helpful to you.

Best regards,

Ulrich Stiller
Tax consultant/Diplom-Business Economist