Tax liability in Germany for residents in Peru
September 27, 2011 | 30,00 EUR | answered by Dipl.BW/SB Ulrich Stiller
Dear tax advisor,
I am currently working on long-term projects worldwide. Therefore, I spend most of the year abroad (~48 weeks/year).
I am 30 years old and recently bought a condominium in Germany (simply to stop paying rent). Additionally, I will soon be moving into an apartment in Peru (initially as a renter). Furthermore, I am engaged in Peru and expecting a child.
I have already discussed with my supervisor the possibility of relocating my residence to Peru. Personally, there is no obstacle to this, as I already have a purely travel-based job. (So, it would essentially not matter where I travel from).
These are the basic conditions. My question is, in which country do I have to pay my taxes? Or if there is a way to save taxes, for example, by fulfilling my tax obligations in Peru, where the tax rate might be lower.
Sincerely,
The inquirer
Dear inquirer,
Thank you for your inquiry, which I would like to answer based on the information you provided and in the context of your situation in a preliminary consultation as follows:
If you have a residence in Germany, you are also subject to unlimited income tax in Germany with your so-called global income. It does not matter whether you use the apartment regularly or only a few days a year, nor does it depend on the registration regulations. Since Germany also does not have a double taxation agreement with Peru, if you have a residence in Germany, the taxation right remains with Germany within the framework of unlimited tax liability.
However, if you are employed in a dependent activity under the Foreign Activity Ordinance (ATE), taxation in Germany of these incomes can be waived. For this, you must carry out certain activities related to planning, construction, commissioning, expansion, repair, modernization, monitoring, or maintenance of factories, buildings, stationary machinery, or similar facilities, as well as the installation, positioning, or repair of other assets, or be engaged in advising foreign clients or development aid. Whether this applies to you cannot be assessed remotely.
If you neither have a residence nor habitual residence in Germany, you could only be subject to limited income tax if you have income in Germany within the meaning of § 49 of the Income Tax Act. This includes income from non-self-employment. However, physical presence in Germany will be assumed. Since, according to your description, this is not the case, there should also be no limited income tax liability in Germany with regard to income from non-self-employment if you do not have a residence or habitual residence in Germany.
I hope I could help you.
Best regards,
Ulrich Stiller
Tax advisor/Diploma in Business Administration
