German expat with family in Bulgaria - remote work in Germany - questions about taxes and health insurance
July 10, 2021 | 50,00 EUR | answered by Steuerberater Bernd Thomas
I am planning to relocate to Bulgaria with my family. I will be traveling with my wife and three children, all of whom are currently covered under my family insurance. My employer is based in Germany and supports my plan. This means I can continue working for my employer as an IT specialist in a remote capacity from Bulgaria. My employer has also mentioned that my contract could be transferred to another company within our corporate group in Bulgaria/Sofia, under German conditions (with the same gross salary), if necessary.
Now, my questions are:
a) Is it necessary, advisable, and/or financially more advantageous to have the contract run through the Bulgarian company?
b) What do I, as an employee, need to do in order to benefit from the lower Bulgarian taxes sooner?
c) From a tax advisor's perspective, is it more cost-effective to switch to a Bulgarian health insurance instead of a German international insurance? Am I required to take out Bulgarian health insurance? Cost-wise, it definitely matters when considering insurance for the children and spouse. What is the smartest approach here?
Thank you.
Dear questioner,
I am happy to answer your inquiry based on the information provided in the initial consultation on frag-einen.com. The response is based on the facts you have provided. Missing or incorrect information can affect the legal outcome.
a) If and to the extent that work is carried out in Bulgaria and you also have your main place of residence in Bulgaria (tax residency, domicile, and permanent residence only in Bulgaria), the right to tax according to the double taxation agreement lies with Bulgaria (Art. 14 Para. 1 DTA Bulgaria), unless there are any special circumstances (Art. 15 to 18 DTA Bulgaria, but there are no indications of this in the information provided).
However, the German employer can only waive withholding tax if an application according to § 39 Para. 4 No. 5 EStG is submitted and approved.
b) Switching to the Bulgarian subsidiary/sister company would facilitate the process.
c) Regarding social security obligations, an inquiry should be made to the German Liaison Office for Health Insurance Abroad (DVKA) to obtain a legally sound answer on which social security system applies (GKV-Spitzenverband, Deutsche Verbindungsstelle Krankenversicherung – Ausland, Pennefeldsweg 12 c, 53177 Bonn). You may need to have health insurance in Bulgaria.
Best regards,
Bernd Thomas
Tax advisor
Information according to DL-InfoV: Tax advisor Dipl.-Kaufmann (FH) Bernd Thomas, Neustadtswall 85, 28199 Bremen, member of the Hanseatic Chamber of Tax Advisors Bremen, registration number 111705, professional liability insurance with R+V Allgemeine Versicherung AG, Mittlerer Pfad 24, 70499 Stuttgart, insurance sum: 250,000 euros per individual claim; annual maximum benefit: 1,000,000 euros (for all claims in one insurance year); the professional regulations of §§ 3, 3a, 32, 43 Steuerberatungsgesetz apply (regulations can be viewed at: http://www.gesetze-im-internet.de/stberg)
