Work abroad
October 22, 2010 | 40,00 EUR | answered by Michael Herrmann
Dear Sir or Madam,
I am a resident of Germany and will be working in Africa from 1.1.2011 for one year. I will be paid by my African employer in Africa (Equatorial Guinea), receive my money into an account of my choice, and I do not have to pay taxes there. Gross is therefore equal to net for me. It should stay that way.
My questions:
- Do I have to pay taxes in Germany on the salary I receive in Africa?
- If yes, what would it be like if I deregister my residence in Germany for the year?
- Would I have to register my residence in Africa then?
- What do I need to do specifically to not pay taxes in Germany for this one year?
Thank you for your response.
Dear inquirer,
First of all, thank you very much for your inquiry, which I would like to answer based on the information provided and considering your commitment to an initial consultation. The response is based on the description of the situation. Missing or incorrect information about the actual circumstances can affect the legal outcome.
In German tax law, a distinction is made between unlimited and limited tax liability.
Unlimited tax liability applies to natural persons who have a residence or habitual abode in Germany.
A residence is where someone has a place to live under circumstances that indicate that they will maintain and use the residence, it does not depend on the person's will, but only on the actual circumstances, so spouses can have residences in different places and minor children do not necessarily establish a residence at their parents' residence. A person can also have multiple residences, with one residence in Germany being sufficient to establish unlimited tax liability.
An apartment is defined as premises that are suitable for living and appropriately furnished. The person who has actual and legal control over the premises occupies the apartment.
Habitual abode is where someone stays under circumstances that indicate that they are not just temporarily staying in that place or country. Here too, the actual circumstances, not the internal intention, are decisive. Since staying in Germany is sufficient, traveling merchants, itinerant artists, etc. can also establish a habitual abode and thus unlimited tax liability.
In your case, it is crucial that you no longer have a residence in Germany. The residence registered in the registry office only has indicative effect. From a tax perspective, it is important that there is no longer control over an apartment in Germany. It is sufficient to meet the requirements for only one day per year.
If you continue to be subject to unlimited tax liability in Germany, you would have to pay taxes on the African income as foreign income in Germany. The amount of this income is determined according to German tax law. Since no double taxation agreement has been concluded with Equatorial Guinea, the income cannot be exempted in Germany. Only the taxes paid in Africa would be credited.
Therefore, it is essential to permanently give up the residence in Germany.
Limited tax liability is based less on the person who earns the income, but rather on the source of its generation. The individual taxable incomes are listed in § 49 EStG, the tax modalities in § 50 EStG, and the specifics of tax collection (especially the collection of withholding tax) in § 50a EStG. It applies to income earned by non-unlimited tax liable persons in Germany that is still being received here. According to your description of the situation, the triggering incomes for limited tax liability are not apparent.
I hope that these details have provided you with a sufficient overview of the situation within the scope of your commitment, and remain
Yours sincerely,
Michael Herrmann
Dipl.-Finanzwirt (FH)
Tax Advisor
