Unrestricted tax liability in Germany, application of splitting tax rate.
July 15, 2012 | 30,00 EUR | answered by Wirtschaftsprüfer André Hintz
My wife works in the public service of another EU country with which a double taxation agreement exists. The DTA states that salaries from public sources in her country of origin are to be taxed.
Throughout the year 2010, we lived together in Germany, as my wife did not work due to the birth of children. For the first month, she received German parental leave benefits, and for months 2-11, she received continued payment from her foreign public employer (maternity leave for child 2).
In late November, she started working at her country of origin's embassy in Germany and obtained diplomatic status from that point onwards.
My questions are:
Can we take advantage of the marital splitting benefits for the part-time period of 2010 in which my wife did not have diplomatic status but received her salary (months 1-11)? This does not apply to the last month as that has already been assessed.
In particular: Does the fact that her income during the entire period (initially parental leave benefits, then salary to be taxed abroad) is not taxed in Germany possibly exclude her from being considered a resident taxpayer in Germany (a requirement for the splitting tax rate)? She did not have any other sources of income in Germany.
If marital splitting is possible for the first 11 months, how will the German tax to be paid be calculated?
Where should my wife's income or the taxes paid abroad by her be entered (Attachment EWG or Attachment Foreign)?
Dear inquirer,
I would like to answer your question within the scope of an initial consultation and based on your fee commitment, along with the rules of the online portal. My response refers to the situation you have described.
The prerequisites for the joint taxation of spouses (Ehegattensplitting) are unlimited tax liability in Germany and the existence of a marriage.
Tax liability arises automatically if you have your residence or habitual abode in Germany. The marriage must have existed for at least one day during the relevant assessment period.
If both prerequisites are met, you can jointly apply for the application of the joint tax tariff.
In simplified terms, with the joint tax tariff, the incomes of both spouses are added together and then divided by two. This result is used to determine the tax rate, which is then applied to the total income.
Please note that income from parental leave benefits and income exempted by a Double Taxation Agreement (DBA) are subject to the progression clause. This means they are added to the calculation of the tax rate as if they were taxable. However, this increased tax rate is only applied to taxable income.
You must enter income from non-self-employment in another country in Annex N line 21 for the 2010 assessment period.
You must enter parental leave benefits in Annex N line 27.
I hope my explanations have been helpful to you and remain
Yours sincerely,
André Hintz
Tax advisor
Steuerberatung@andrehintz.de
