Registration & tax for a UK / Munich resident

Hi,

This is the situation. I live, work (angestellt), and am taxed in Germany. I have been here since 2001. During this time my Finance has continued to work in London and we have had a long distance relationship. This changed somewhat last year when my Fiance was given permission by her employer in the UK to work from home 2 days a week. She now flys to Munich on Thursday and back to the UK on Monday 3 times a month and spends 1 weekend a month in the UK. With holidays and everything else factored in she spends somewhere between 120 and 160 days in Germany a year. Up to now we have not registered her (I believe this to be unnecessary as she is effectively here as a tourist, just more often than most) and she continues to pay taxes in the UK. We have this year bought a Wohnung here in Germany which we rent out and so will have to complete a tax return for my partner (tax man was very swift in letting us know this).

So that is the situation. The question I have is can I make this situation work for us in terms of tax? Does anybody have any experience of a similar situation or have the address of an advisor who my Fiance can talk to. We want someone where the initial consultation is free and if they can save her tax in anyway that it is then discussed further...

All advice and contacts much appreciated.

Thanks.

I shall assume this was a Freudian slip?

This thread might help:

Reporting interest to "home" tax authorities

To start - in a nutshell it doesnt matter what you personally do - her tax is her business.

In simple terms she MUST be resident in one country or the other for tax purposes. There is no clever "I dont live anywhere really" dodge to be had.

Residency for tax purposes is decided by things like number of days in the country, place of owned abode etc. Travelling days between countries do not normally count towards a total. So flying in on a Monday and out on a Friday night is 3 days for tax purposes.

On the above information she is clearly and without question resident for tax purposes in the UK. She owns 50% of an overseas investment and must account for this on her UK return.

Obviously the other 50% is owned by you and of course the income must appear on your German tax return. Quite surprised you are saying that she also has to file a German tax return...but am sure one of the advisors advertising on TT can help as I don't know on that score.

been trying to opt out of this tax bit for years...never had much success except when I was unemployed...

and I think even then I got some sort of bill

In all honesty I would just keep quiet, until she gets a job here and then just act like shes just walked off the plane ...

However...

if you do decide to sort this out officially then you need to get a decent Tax firm to do both ends IE in the UK and in Germany.

This is a grey area of the law and the finanzamt will go after everything they think they can possibly get, meaning that she could end up paying more tax here, on the positive side there are things you can claim. Whatever you decide, if start going anywhere near the Finanzamt make sure you have a tax accountant first.

@ Johnny English

Thanks for the reply. Pretty much the same conclusion I had come to myself, except not sure if one owns property here, but is not resident here for tax purposes if they can hit you for tax here before you declare it in the UK. Clearly there can be no double taxation, but quite which regime takes presedence I am not sure.

often you just pay the relevenat tax in whatever country you earned the income - and then you can demonstrate to the tax authority where you are resident that you have taxed income in the country from which it originates. As you say there is no double taxation.

She will need to complete a tax form here which also declares she has been taxed on this very same income in the UK. If the tax paid there is equal to or more than would have been levied here then that is the end of it. If the tax is less here she may have to pay the difference.

It MIGHT be an idea to declare her as resident here for tax purposes. Depending on her job it could then be considered that her home in the UK was a second residence, required for occupational purposes. In that respect all costs of the UK home, and the travel back and forth could be considered for tax relief against German income.

This is specialist stuff - consider specialist advice. There's plenty of tips for folks-in-the-know on this forum. Failing that try Wittig & Fahn who do deal with international matters and speak English.

YL6

I use Wittig and Fahn for German side of things - very pleased with them so far.


I assume you mean registered at both ends? She cannot of course decide where she is resident - that will be based on the rules/facts etc and at this stage she is 100% UK resident without any doubt.

But I know what you were really asking - and there are no funky angles on this I am afraid. If she is resident and in fact non-domicile (e.g. not UK by birth) there "may" be some capital gains tax angles...but probably irrelevant as the increase in value of 50% of a flat over here wont be much above the CGT limits etc anyway. And if she comes to live here it is all history anyway.

Its the 180 day rule.

Ooops. Been having so many fun chats about tax I added the wrong link above. It was this one you wanna read:

UK taxes & 90 day rule for non-permie residents

There is also a "90 day rule" that can apply. But sounds like she is only divided between the two countries and clearly lives, works and spends more than 50% of the year in the UK - so she is tax resident in the UK without question.

I’ve been in Munich for 1.5 years now and I’m sure it’s not wishful thinking on my fiancés part that I only spend 120 days here a year in fact I spend 240 days a year in Munich a (counting nights not days I fly out) As far as I know the number of days you spend in a country does affect your residency so if I register as a German resident and pay tax in the UK I may get some benefits from the UK tax system but ONLY if it means not having to pay any additional tax here. Oh to be (a German resident) or not to be. Anyway THANKS for all the advice I’m trying to get hold of some UK / German tax specialist to sort out the finer details.