Second residence abroad
May 7, 2009 | 35,00 EUR | answered by Ginster Frank
Dear Sir or Madam,
I will be relocated to Poland by my company for approximately 5 years to train personnel there. The payment will still come from the German company and will be taxed there as well. My room in my parents' house will remain my primary residence. The apartment in Poland will be considered my secondary residence.
My question:
Can I deduct the travel expenses between my primary residence and my secondary residence in my income tax return, and are there any other tax advantages available to me?
Dear Madam,
Dear Sir,
In response to your inquiry, we would like to briefly inform you of the following:
Firstly, it is important to determine where your main residence is located.
Based on the situation you describe, it appears that your main residence is in Poland during your work in Poland. Therefore, according to German regulations, you would only be subject to limited tax liability if you earn domestic income as defined in § 49 EStG. However, your inquiry does not provide any information on this. Therefore, income from employment is to be taxed in Poland according to the double taxation agreement between Germany and Poland.
In the case of maintaining two residences, it is essential to determine where the center of life interests lies. This is done based on external characteristics. If you maintain a residence in Poland, that would be your main residence, as the room in your parents' house is likely of lesser importance compared to the residence in Poland. However, there is no information regarding whether the residence in Poland is smaller than the room in your parents' house.
1. Relevant main residence according to the double taxation agreement is in Poland
You are subject to unlimited tax liability in Poland and receive taxable income there as a resident taxpayer in Poland.
The tax is calculated based on general tax tables and deducted through wage withholding.
The provision of housing by the employer under an employment contract is considered a taxable benefit.
The following flat-rate deductions are recognized:
- 2009: 1,335.00 Polish Zlotys annually
- In the case of employment and a workplace outside the place of residence: 1,668.72 Polish Zlotys annually
Higher deductions are only considered under Polish law if they are related to public transportation costs.
If the activity does not cover the entire assessment period, the above flat rates must be prorated by months. According to Mennel/Förster, Taxes in Europe, America and Asia, note 109 ff., there are no further deduction possibilities for expenses related to double household management.
2. Relevant main residence is in Germany
In this case, you would still be subject to unlimited tax liability in Germany. However, the income is exempt in Germany. To calculate the German tax rate, the income must be determined according to German regulations. This means that German tax laws, not Polish tax laws, apply to determining the tax bases. In this case, there is no double household management.
However, two residences can be maintained if both are supported by the individual financially. Merely providing a room is not sufficient.
If these conditions do not apply, only travel costs between Poland and Germany can be claimed. These costs only affect the progression clause. If you have no other income, the tax burden in Germany remains at 0.00 ?.
If you have any further questions, please contact our law firm at 02232/9345-0.
Sincerely,
FRANK GINSTER & Partner
Tax consultancy firm
Frank Ginster
Diploma in Finance
Tax consultant
... Are you also interested in this question?