tax exemption
January 8, 2010 | 40,00 EUR | answered by Michael Herrmann
Dear Sir or Madam,
my primary residence is in Germany. However, from the end of May to mid-December 2009 (203 days), I was continuously deployed as a soldier of the Bundeswehr in Afghanistan.
As I spent more than half of the year abroad, I am wondering if I am entitled to a refund of German domestic taxes for the year 2009.
Dear inquirer,
First of all, thank you very much for your inquiry, which I would like to answer based on the information provided and in the context of your assignment in an initial consultation. The response is made in accordance with the description of the situation. Missing or incorrect information about the actual circumstances can affect the legal outcome.
The key factor in determining whether you are subject to unlimited or limited income tax liability in Germany is your place of residence:
- If you have maintained a residence in Germany, you are always subject to unlimited income tax liability here with your total income from both domestic and foreign sources. I assume that you have not given up your residence during your assignment.
- If you give up your residence in Germany, you are only subject to limited income tax liability here with certain income earned in Germany.
Foreign income is exhaustively listed in § 34d of the Income Tax Act.
Income from abroad, but not domestic income, includes
in particular income granted by German public authorities for active work abroad.
The question of residency is therefore not significant in your case regarding the taxes paid in Germany, as your income is already taxable in Germany as domestic income.
Since there is no double taxation agreement with Afghanistan, it is important to note that the foreign activity exemption does not apply to the activities of Bundeswehr soldiers and Afghanistan could potentially impose taxes, which is likely a hypothetical assumption.
In this case, you could credit the foreign income tax against your German income tax liability (§ 34c (1) of the Income Tax Act) or deduct it as business expenses from the total amount of income (§ 34c (2) of the Income Tax Act). Ultimately, Germany always has the right to tax.
In your question, you emphasize being more than half absent. According to the 183-day rule, it determines whether in the case of temporary work abroad, the residence state or the work state has the right to tax your income. The rule applies when your employer, who pays your income, does not have a presence in the work state and does not pass on your income to the foreign establishment, which it may have in the work state.
Apart from the fact that your employer as a public institution is subject to special regulations, the 183-day rule would only apply if there was a double taxation agreement with Afghanistan.
Therefore, from the perspective of the taxation rights of the German tax authorities regarding your stay abroad, there are no specific features.
I hope that these explanations give you a first overview of the situation and remain
Yours sincerely,
Michael Herrmann
Dipl.-Finanzwirt (FH)
Tax advisor
