Ekst- with residence in France
July 18, 2012 | 40,00 EUR | answered by Michael Herrmann
Hello,
I am a retired civil servant from Saxony-Anhalt and first lived completely in France in 2010. My wife is French and has income from pensions and rental of about 15,000 euros (8,000 euros pension, 7,000 euros rent). This income is taxed by my wife through a tax return in France. We no longer have a residence in Germany. In my tax return for 2010, I was recognized as having unlimited tax liability, but my wife was denied, leading to significant tax costs. "org.Finanzamt ... as she, due to the still existing employment relationship (free phase of partial retirement) at the beginning of 2010, falls under unlimited tax liability according to § 1 para. 2 EStG, but for her wife an unlimited tax liability is not possible due to this provision .... The tax returns from the French tax office for EU/EWR were attached to my tax return. After explaining the situation, my question now is, what should be considered when preparing the next income tax returns in order to come into the most favorable class for me? Will I still be subject to unlimited or limited tax liability in the future? (no income in France, pension and retirement fall 100% under German tax law) What conditions must be met to make my wife subject to unlimited tax liability upon request? Attached you will find the rejection letter from the tax office regarding my objection. Does your office also handle the preparation of income tax returns? And what would be the associated costs?
Dear inquirer,
First of all, thank you for your inquiry, which I am happy to answer based on the information provided and in the context of an initial consultation. The response is based on the description of the facts. Missing or incorrect information about the actual circumstances can affect the legal outcome.
You and your wife are subject to unlimited taxation in France due to your residence there. German tax law provides for the possibility of recognizing unlimited tax liability, despite living abroad, in cases where almost exclusively domestic income is earned. This applies only to the situation described.
Therefore, the tax office correctly explained that there can be no application of unlimited tax liability in Germany for your wife. The taxation rights of a country (in this case France) are generally not dependent on the taxpayer's choice.
However, by choosing to apply unlimited tax liability, you are still in a better position than being taxed as a limited tax resident with domestic income. Nevertheless, it is worth considering whether it would be beneficial for you to be limited tax residents in Germany and unlimited tax residents in France together with your wife. It is possible that this could maximize tax advantages in France, balancing out the disadvantages of German taxation. This would need to be assessed by a French tax advisor.
It is important to note that you cannot benefit from joint taxation with your wife in Germany, as she cannot be taxed there.
I hope this information provides you with an adequate overview of the situation in the context of your inquiry and initial consultation, even though you may not derive a satisfactory outcome from it, and remain
Yours sincerely,
Michael Herrmann
Dipl.-Finanzwirt (FH)
Tax Advisor
