Emigrated and Taxation
April 30, 2012 | 50,00 EUR | answered by Dr. Yanqiong Bolik
Dear Sir or Madam,
I am currently in the process of preparing my annual income tax return for 2011 and was employed in Germany until 31.03.2011. I was able to leave my employer with a significant severance payment, which was paid out to me on 30.04.2011 according to the fifth rule. This was deducted by the employer. Since May 2011, I have been living in the Philippines and deregistered from Germany, and my discount broker has listed me as a non-resident taxpayer in Germany since July 2011 (so no flat-rate tax is withheld). I trade privately with US stocks bought and sold in the USA through my German broker. Apart from that, I have no other income and business, I live off my savings, and trading is just a hobby. Assuming that I have no or only limited tax liability in Germany, I have the following questions:
1) Is the taxation of the severance payment according to the fifth rule correct, or should I expect a less favorable taxation due to my emigration or should it be taxed in Germany at all?
2) I assume that my capital gains are taxable in the Philippines, is this assumption correct?
3) Where do I need to report my taxes paid in the Philippines in the following year, and what evidence do I need to provide, or do I need to report them in Germany at all?
4) As it is possible that I may be in a worse tax position in the Philippines: Can I still have my taxes assessed in Germany despite residing in the Philippines, under the condition that I have no registered postal address and do not visit Germany?
Yours faithfully, [Your Name]
Dear inquirer,
Thank you for your inquiry, which I am happy to answer taking into consideration your input and the rules of this platform.
Please note that my explanation is based on the facts presented, and that adding, omitting, changing information, or the ambiguity of the information can change the tax result.
Based on your description of the situation, you had a residence in Germany until 30.04.2011. Therefore, you were subject to unlimited income tax liability in Germany until that date. The unlimited income tax liability ceases upon moving from Germany from 05.2011. In the case of a change of residence during the calendar year, only one assessment is to be carried out, according to the principles of unlimited tax liability as per § 2 para. 7 sentence 3 EStG.
1. Severance payment was made before the move (during the period of unlimited tax liability) and is taxable in Germany. If the severance payment was made by the employer as compensation for disadvantages associated with the termination of the employment relationship, especially for the loss of the job, and leads to a concentration of income within one assessment period, it will be taxed at a reduced rate according to the fifth rule, regardless of your move from Germany.
2. According to your description, your securities account is held with a German broker. Capital gains until 30.04.2011 are subject to limited income tax liability. Those after the move are taxed according to Philippine law.
3. In the case you described, there are no income for which you need to provide proof of tax paid in the Philippines.
4. Foreign residents (individuals residing abroad, without a residence or habitual abode in the country) with domestic income (income taxable domestically according to § 49 EStG) can be treated as unlimited tax residents upon request if the income is subject to at least 90% of German income tax, or if income not subject to German income tax does not exceed the basic tax allowance (8004 EUR). Please note, however, that unlimited tax liability in Germany does not exempt you from tax liability in the Philippines. This will continue to be assessed according to Philippine law.
I hope I was able to assist you.
If you have any further questions, please feel free to use the follow-up function.
Best regards,
Dr. Yanqiong Bolik
Tax consultant
Bildstöckle 6, 70567 Stuttgart
Tel: +49 (0)711 / 2132 1815
Email: info@zdbz.de
www.steuerberatung.zdbz.de
