Foreign stay tax class 3
October 24, 2011 | 25,00 EUR | answered by Oliver Burchardt
Dear Mr./Mrs. Tax Advisor,
I am married and will be going to the USA for 2 years starting in January 2011. In the first year, I will be seconded, meaning I will continue to be paid by my German employer (university hospital). My wife receives a DFG scholarship and therefore, to the best of my knowledge, does not have any taxable income. (In the second year, we both will receive a scholarship). Currently, we both have tax class 4 because we earn roughly the same amount.
Now my question is whether it is possible and beneficial for me to switch to tax class 3 in the first year of my stay abroad? Do I need to maintain a residence in Germany for this?
Thank you for your help.
Dear inquirer,
Thank you for your inquiry, which I am happy to answer as part of an initial consultation.
Please note that the tax assessment is based on the information provided. Changing, adding, or omitting information may significantly alter the tax assessment.
First, it needs to be clarified which state actually has the right to tax. Only if the taxation right lies with the Federal Republic is the question of the tax class relevant.
Based on your description, I assume that you are going to the USA for a research stay and thus meet the conditions of Art. 20 of the USA Double Taxation Agreement. Therefore, you would still be subject to taxation in the Federal Republic if you maintain a residence here.
This means that your employer would still withhold income tax. A change to tax class 3 is possible. Whether such a change is advisable can generally only be answered on a case-by-case basis. However, if your wife does not have taxable income, such a change is advisable.
Whether your wife's scholarship is actually tax-free, I cannot determine in this forum. According to a tax office directive, for example, the Heisenberg scholarship is not tax-free, but scholarships from the University Special Program II are tax-free.
Please note that my assessments in your case cannot replace a detailed tax consultation. Double taxation law is very complex, and whether all the requirements of Art. 20 of the USA Double Taxation Agreement are met can only be determined based on the actual employment contract. The same applies to the tax exemption of your wife's scholarship.
I am available for such a detailed consultation, deducting the amount paid here.
Best regards,
Oliver Burchardt
Tax advisor
