Tax liability for foreign residence
February 25, 2012 | 30,00 EUR | answered by Dr. Yanqiong Bolik
I have been living in Austria since 01.11.2010 as a German citizen without any residence or business relationships in Germany. However, last year I bought an apartment in Berlin as an investment, which I plan to resell or rent out. I have also kept my bank account and securities portfolio in Germany. I also intend to move my residence to Lithuania.
Questions (taking into account the double taxation agreements):
1. Am I subject to limited tax liability in Germany, or extended limited tax liability?
2. Do I have to pay capital gains tax in Germany on transactions (e.g. apartment sale, securities sale, including German securities), on dividends, interest, or rental income? If so, to what extent?
3. Do I have an obligation to file a tax return in Germany in relation to the above?
4. Will anything change in this regard if I move my residence to Lithuania?
Dear inquirer,
Thank you for your inquiry, which I will gladly answer taking into account your input and the rules of this platform.
Please note that my explanation is based on the situation presented, and that adding, omitting, changing information, or the ambiguity of the information can change the tax result.
1. Based on your information, I assume that you neither have residence nor habitual abode in Germany. You also do not receive remuneration from a German public fund and are not employed by a German legal entity of public law (e.g. diplomats). You are subject to limited income tax liability in Germany if you earn domestic income according to § 49 EStG.
2. Profit from the sale of a property located in Germany can be taxed in Germany according to the German-Austrian/Germany and German-Lithuanian/Germany Double Taxation Agreements. If it concerns private sales transactions (sale of real estate from private assets within a 10-year period), the profit will be taxed in Germany. The tax amount will be calculated according to the tax rate.
If the securities are not shares or other interests in a company whose assets are predominantly comprised of immovable property in Germany, profits from the sale may generally only be taxed according to the German-Austrian/Germany and German-Lithuanian/Germany Double Taxation Agreements in the contracting state where the seller is resident.
Interest may be taxed in the contracting state where you are resident according to the German-Austrian/Germany and German-Lithuanian/Germany Double Taxation Agreements. However, in the case of Lithuania, Germany may levy withholding tax not exceeding 10% of the gross amount of interest.
Income from renting a property located in Germany will be taxed in Germany.
3. If you have taxable income in Germany, for which income tax is not deemed to be covered by tax deduction, you are also required to submit an income tax return.
I hope this overview was helpful to you.
If there are still any uncertainties, please feel free to use the inquiry function.
Best regards,
Dr. Yanqiong Bolik
Tax consultant
Bildstöckle 6, 70567 Stuttgart
Tel: +49 (0)711 / 2132 1815
Email: steuer@zdbz.de
www.steuerberatung.zdbz.de
