Taxation and residence abroad
March 2, 2012 | 30,00 EUR | answered by Dr. Yanqiong Bolik
This morning, one of your responses caught my eye. Now I am writing to you because I need help. Perhaps you can answer parts of it and know where I can further inquire. I will simply outline my situation and the questions related to it.
I live with my family (wife and 3 children) in a non-European country. Until the year 2007, I was employed at a German university and paid taxes in Germany diligently. Since 2008, I have been employed by an international organization based in Latin America. This organization pays my salary, which is transferred to a German account. As this organization has a tax exemption agreement with my host country, I do not have to pay taxes here. Since the organization is non-European, I probably do not have to pay taxes in Germany either (is that correct?). I live permanently in Africa, except for short visits (perhaps a total of 1 month per year) to Germany. I have a room in my parents' house in Germany and am registered there, which has not been a problem so far.
Now my questions:
a) Do I have to pay taxes in Germany or am I exempt from taxation?
b) Am I doing anything illegal?
c) Do I necessarily have to deregister completely in Germany (which I do not want to do) or can I continue as before? Please explain the situation regarding residence and official registration.
d) My children still receive child benefits, even though I do not live permanently in Germany. Is this lawful, or do I need to deregister them from child benefits?
e) One of my children would like to study in Germany in 2 years, and I am afraid that if we deregister, there will be issues with enrollment.
f) Is it possible to live abroad and pay a "minimal amount" of taxes to remain in the German tax system?
g) I have not filed a tax return for 3 years. Was that correct/incorrect, and will there be problems if I ever return to Germany?
If you do not understand all the details, I can explain my situation better. I would greatly appreciate your help!
Dear questioner,
Thank you for your inquiry, which I will gladly answer, taking into account your contribution and the rules of this platform.
Please note that my explanation is based on the facts presented, and that adding, omitting, changing information, or the ambiguity of information can change the tax result.
a) Whether you have to pay taxes in Germany depends on your tax liability and whether you have earned taxable income in Germany. Based on your description of the situation, one could argue that you have a residence in Germany.
According to § 8 AO, someone has their residence where they have a place to live that indicates they will maintain and use it. In contrast to Civil Law, which relies on the intention regarding the establishment, maintenance, and abandonment of the residence, the tax law concept of residence is objectified: it focuses on the actual situation and overall relies on external characteristics, without leaving room for subjective elements or intentions (cf. BFH judgment of November 23, 1988 II R 139/87, BFHE 155, 29, BStBl II 1989, 182). The decisive factor is the objective state, namely having a place to live under circumstances that justify the conclusion that the resident will maintain this residence and use it constantly or with some regularity and habit. It must be probable, based on the overall circumstances, that the taxpayer will continue to use the residence not only temporarily in the future (cf. BFH decision of November 5, 2001 VI B 219/00, BFH/NV 2002, 311; Buciek in Beermann, Tax Procedure Law, § 8 AO Rz. 37 ff.). If this condition objectively exists, any intention of the taxpayer not to establish or maintain a residence at this place is irrelevant (cf. BFH decision of November 5, 2001 VI B 219/00, BFH/NV 2002, 311; BFH judgment of November 23, 1988 II R 139/87, BFHE 155, 29, BStBl II 1989, 182; each with further references).
An apartment within the meaning of § 8 AO is a stationary space suitable for living on a permanent basis (Buciek in Beermann/Gosch, § 8 AO Rz. 15 with further references). If the space offers the possibility of a private atmosphere, a minimum qualitative standard is not required to fulfill the concept of a residence (cf. Buciek, ibid .; Birk in Hübschmann/Hepp/Spitaler, § 8 AO Rz. 27). A modest abode is sufficient (Birk in Hübschmann/Hepp/Spitaler, § 8 AO Rz. 20). An enclosed apartment within the meaning of the Valuation Act is not required; also, a personal kitchen and sanitary facilities are not necessary (Birk in Hübschmann/Hepp/Spitaler, § 8 AO Rz. 23). It is also irrelevant whether the space is equipped with the individual's own or others' furniture and equipment (cf. BFH judgment of November 14, 1969 III R 95/68, BFHE 97, 425B, BStBl II 1970, 153).
Having a residence requires that the taxpayer can actually use the premises and not only temporarily use them. The apartment must objectively be available to the owner for use at all times and subjectively designated for this purpose (cf. Schwarz in Schwarz, AO, § 8 Rz. 8; Buciek in Beermann/Gosch, § 8 AO Rz. 21; each with further references). For the objective possibility of using the apartment, a derived power of disposal is sufficient (cf. Buciek in Beermann/Gosch, § 8 AO Rz. 22 with further references). Exclusive use is not required; someone can have an apartment with other individuals (cf. Schwarz in Schwarz, AO, § 8 Rz. 8). Likewise, a secured legal position of the apartment owner is not relevant (cf. Buciek in Beermann/Gosch, § 8 AO Rz. 22); what is decisive is the actual relationship of disposal. The apartment must actually serve as a residence to the taxpayer. This is the case if the apartment is visited regularly or with a certain regularity for residential purposes or at least kept available for such use (cf. Buciek in Beermann/Gosch, § 8 AO Rz. 26, 28 with further references). Establishing a residence does not require a minimum number of days of stay per year (cf. BFH judgment of January 28, 2004 I R 56/02, BFH/NV 2004, 917, HFR 2004, 988-989); however, the use of the apartment must be for residential purposes and must exceed the scope and regularity of ordinary vacation and recreational stays (cf. Buciek in Beermann/Gosch, § 8 AO Rz. 27 with further references).
If you occupy a room in your parents' house, then based on the above explanation, you have a residence
