Living in Germany and working remotely in the U.S.

Hello,

I'm a US citizen (on paper) but my entire family (parents, brother, aunts, uncles, etc.) lives in the Stuttgart area, has been for generations. My situation is a bit complicated as my father was a US citizen at my birth (he emigrated, became a US citizen, then moved back to Germany and is now a German citizen again) and my parents didn't apply for dual citizenship for me back when they should have. I'd like to move to Germany with my husband and children to be closer to my parents and relatives and because I'm "homesick", have been for many years.

For the past 4 1/2 years I've been trying to get dual citizenship US/ German via the help of a lawyer, so far without success even though I have shown that I can invest 1 Mill. Euros, create more than 10 jobs, etc. I lived in Germany for almost 20 years, spent all of my youth and schooling there, am a German through and through, in my hear and soul (and blood). I own German real estate, am part owner of a small German company, have a Masters Degree, am educated and well-off financially but all that doesn't seem to matter. It is absolutely mind-boggling to me how my application has been turned down, time and time again. We're now sueing at the first level. Please pray for a positive outcome for me/ us.

I can't give up my US citizenship because I'm afraid that then I won't be able to live/ work in the US again.

Does anyone here know if it is possible to live in Germany without being hired by an employer and without working there at all? I am a College instructor and could continue working for my US employer via the internet. While I can/ could invest 1 Mill. Euros to create a new company (a type of language school) I don't want to do that right off the bat, before getting to know the area better where we plan on moving. We have enough financial resources here in the US to allow us to live in Germany modestly but comfortably for many years to come, without "taking away a job from a German".

Could we just fly to Germany, rent an apartment there and live as "tourists" indefinitely or is there an enforced 3 month time limit? I called two German "Auslaenderaemter" and got conflicting information.

Thank you.

If you are still working with your employer in the US, then you are employed. You would just need to show proof of such employment, and you would need to sign up for health insurance in Germany and register your residence with the police once you have an address (as everyone must, citizen or not.) You would need to pay taxes to the German government and file a US tax report every year. I don't think that the investment thing applies to you, since you would be employed.

A US citizen cannot live in Germany for longer than three months without a residence permit.

Do a search of the forum; there have been discussions of how people have managed to retain their US citizenship while also holding German citizenship. You don't need to have German citizenship, though. I know Americans who have lived the better part of their lives (in years and quality!) in Germany and have never changed their citizenship.

I suspect that trying to get dual citizenship has blown you off course in your quest to live in Germany. Forget about getting citizenship for now, and concentrate on just getting an Aufenthaltserlaubnis for you and your family.

yep without a work permit a residence card is available. Of course you have to be financialy stable if you are not strong enough financial you can have your family ,that is living here, sign some papers that say they will assist you if finances fall through. The name escapes me what this form is called.

The reason your application for residence on the basis of being an investor fell through could be because the person/people who reviewed your application decided that there were already too many language schools and if you you had no previous experience as an entrepreneur in that field, they may have deemed your chances of success to be low. Being German in all but your passport, you already know that (the possibility of) entreprenerial failure is generally looked down upon here.

As for teaching online for a US university or college while you are in Germany, you might want to be sure that your employer doesn't have a problem with you living overseas while teaching for them (some US institutions don't permit it) especially since your employer will have to verify your employment in order for you to get a visa.

Hiya, slight tangent, but have you already done the maths or popped into your friendly neighbourhood international tax advisor to understand the financial impact of relocating to Germany and keeping your job in the US? If not, you may want to consider it. As you've said, you're financially well off and can continue working remotely; however, regardless of where you live/work:

-Uncle Sam is still going to want his papers and probably a cut. There are some tax breaks for US expats working abroad but I don't know how you would be categorized.
-if you're living here on a permanent basis then the Germans will certainly want a little something.
-the exchange rates aren't in your favour either.

I get from your post that money isn't an issue or the motivating factor for relocating back home as you say; however, best to be informed in advance.

my 2 capitalist pig cents,
jml

jml, excellent suggestion (since the OP's earned income would be earned from a US source and not a non-US source) and given that the OP is very well-off, she might also want to discuss the tax treaty between the US and Germany with someone familiar with it and both tax systems (esp. CGT and taxation of interest/dividends). Residents of Germany are generally taxed on worldwide income.

NOBODY registers with the police. Registration is NOTHING to do with the police. This is not (yet) a police state.

Correct, the " Das Einwohnermeldeamt " is the place to register ! ( Residency Reporting Office )

It's not necessarily called that in all the Länder.

Youn need to take a deep breath and think:

1. I couldn't glean it from your posts, but are you married to a U.S. citizen for over six years?

2. People from Eastern Europe easily re-obtain German citizenship every day based upon direct German lineage. Therefore, it sounds like you'd have no trouble doing so yourself, especially in light of extant immediate family ties in Germany.

3. If 1 & 2 apply, then you're golden on an eventual hassle-free return to the U.S. Once you do number 2, surrender your U.S. citizenship at the local consulate, and then you'll be a full German national; husband remains a U.S. citizen with a valid Aufenthaltstitel, and your kids are dual citizens until age 18. Should you decide to move back to the States, he siphons you back into the Green Card process and (eventual) U.S. citizenship should you decide to stay permanently.

3. Now it gets financially tough: Even if you obtain your German citizenship, unless your husband (assuming number one above) and/or children (age-dependent) relinquish their U.S. citizenship, you're pretty much all stuck filing joint tax returns, so you're all going to be double-taxed in both jurisdictions indefinately. It's the price of a call option on U.S. citizenship, and until more people want to move to Germany than to the U.S., that's unlikely to change. Be very wealthy, as the annual exclusion is only c. $88,000, and you end up paying the 50%-ish socialist workers paradise tax plus whatever you're liable for in the U.S.. Again, make sure you're already rich enough to live in a poor country such as Germany (I will not even go into the unbelievaby regressive elements such as 19% VAT, everything-else-Steuer, $6 a gallon gasoline, etc. etc.). Even if you all (even ex- the kids) relinquish U.S. citizenship, the IRS will still attach your wages for 10 years. Trust me: You just obtained tens of thousands of euros of legal advice on an anonymous internet chat room.

Advice from an anonymous stranger: Don't screw around and attempt to deceive, or you'll eventually be caught up. Many U.S. Green Card holders live abroad and are deluded by the urban myth that you go back for a shopping trip once a year and it stays "warm" forever. Actually, it's technically six month in/outs, but if they decide you're really residing abroad, then you're not really a "permanent resident' and in this day and age you could wind up face down in an orange jumpsuit. On the German side, unless you're married to a German citizen spouse, U.S. military or a civilian on on a full-boat expat program with a GM, GE or G-whatever U.S. company who lets their legal department take care of all legal snarls for you, don't mess with things. If you handle things wrong on either side, you could find yourself red-flagged in either immigration computer system, and face (after hours or even days of detention) being put back on a plane to either side with your crying kids trapped in another room. P.S. Never travel alone with dual-citizen kids in either direction without having fully-notarized letters to prove you're not bolting your spouse and running off with the kids in advance of a colossal transcontinental custody spat. Worse yet, you could be in a situation where you (as an immigration deadbeat) are unable to freely travel back to either the U.S. or Germany to see grandparents, etc.

Although Expaticus has made some great points and given what appears to be excellent advice, one point that needs to be clarified is the "IRS attaching your wages for 10 years" even if you give up US citizenship. My understanding of this (non-expert and not in any way based upon personal experience) is that if it is determined that you gave up US citizenship for tax reasons you have to file a US tax return for 10 years. I don't know how this can be enforced if you don't travel to the US, and don't have US source income or US-based assets. Additionally, I am not sure how it could be determined that you gave up US citizenship for tax reasons if you took on German citizenship in order to live permanently in Germany. You may want to check on the nuances of the tax and legal consequences of giving up US citizenship if you decide, for whatever reason, to do so.

Completely agreed. But she already said she had a million bucks investable already. That's prety much the test the IRS applies to determine whether you're an international tax dodger or not ... and then you're dumped into the 10-year hellhole. These are underpaid U.S. civil servants, after all, so (and even worse in Bananenrepublik Deutschland, where job-for-life-high-school-gym-teachers rule the roost in a land where people cower before the assistant deputy to the guy who winds the town clock) you're "rich" ... in the same way any individual in Germany is is classified and notched up to a ridiculous marginal income tax rate as "rich" with a EUR 250k income (EUR 500k married).

In reality, at this level, you'd be a complete piker in the states ... but in the Socialist Workers Paradise, that's clearly "genug".

P.S. What reasonable businessperson can realistically give up on travelling to the U.S. for a decade? Hopefully, you might end up like this, but that's the only positive example I could find.

I don't deny that you are right about our underpaid civil servants back in the US, but she is likely to pay higher taxes in Germany on her wealth, ergo she would not be taking on German citizenship to reduce her tax burden, as would, say, taking on Swiss citizenship accomplish. Sounds like something that would be challengeable at the Tax Court or another federal court, where a less underpaid civil servant would decide.

If she has no assets or business interests in the US, she would not have to go there.

The OP could also get a ruling from the IRS in advance.

EDIT: don't forget that just because someone has a lot of assets, it doesn't mean they are paying lots of taxes. What if a resident of Puerto Rico loads up on munis, or never sells their non-dividend paying equities?

Expaticus, is the IRS interpretation of that regulation that the former US citizen is obligated to pay US taxes on their wealth, and that it is assumed that there are necessarily large potential cap gains and income to be taxed?

Been here for 10.5 years and never done this. I just thought if they are looking for me they would find me by my parking tickets .
I'm a nonconformist.

One huge problem: The 10-year rule. If you're a U.S. citizen living in Germany for >10 years, the U.S.-German tax treaty lapses and the local German tax authorities treats you like a German citizen/full-time resident regardless of the domicle on one's assets. Ship your loot to CH, the Isle of Man or anywhere else and it just doesn't matter.

Tust me, our entire Christmas present fund has gone for lawyers' fees to frantically engineer a loophole ... else we're all back to New Hampshire in 2011.

If you have more enlighteed thoughts on this, then please, for the love of god, let us all know ;-)

I have fallen at the mercy of the IRS tax weasels several times since I've been here and it wasn't pretty. Basically they told me as long as I'm in Europe I'm "non-collectible".

Yeah, but even before you hit the ten-year mark, isn't one, as a resident of Germany, anyhow liable to the Finanzamt for tax on all worldwide income?

Yeah, but dude, the difference is two utterly different tax concepts:

1. Despite all its "friend of the working man" propaganda, Germay is the most regressive tax regieme in the world. 19% VAT, EUR86/litre gas tax, and 50%-ish marginal taxation for all income earners regardless of income. in the U.S., if you earn under $40,000 per year as a family, you get money back.

2. It gets even better. Until 1 January 2009, Germany has taxed (and withhled!) all interest and dividends at people's marginal income rates (i.e. Grandma's savings account is presently taxed at 50%), but has allowed rich people to get away with no tax on capital gains held over 12 months. and these Certifiklte as well.

3. Therefore, you can get away with no tax in the U.S. on some stuff, but be taxed in Germnay on other stuff, or vice versa.

You inevitably end up being bitter, screwed, and wishing you'd married someone from the Cayman Islands instead :-(

What I was saying is that you don't simply become liable for German tax on worldwide income after 10 years of residence in Germany- you do from the time your residence starts (assuming you spend more than half of your first year of residence in Germany).

Germany will institute a CGT in 2009, which is, IMHO, a big mistake, as are any personal taxes on savings or investment. You are absolutely correct about the heavy hand of the taxman hitting people at suprisingly low income levels in Germany.

Income tax, absolutely yes. On the income side, the 2009 Abgeltungsteuer actually should be an improvement (25% flat rate on all investment income and capital gains) for most people ... and you can grandfather in most existing mutual funds, etc. tax free for life. Much better than 50% on regualr folks accounts and funds and 0% on >12 month speculative capital gains. That really was not fair.

Estate tax, absolutely no. If you've set up a watertight Qualified Domestic Trust (QDoT) for your non-U.S. citizen spouse in the States, she gets all your loot tax free when you die. Germany doesn't recognize trusts, but if you live in Germany for up to 10 years, they treat you under the U.S.-german tax treaty, and you're fine. After that, Germany wants half the loot. Unless you spend a ton of dough on lawyers who still cannot fully guarantee that whatever they come up with will work. Trust me on this one.

That's why it may be time to start looking to blow this clambake and move back to the U.S. after housing prices plunge the 30% they probably will and hoover up good real eatate with overvalued euros.

Expaticus, if you are either successful or lucky enough to have that much money to worry about, you really should anyhow be looking at living in Switzerland instead of Germany!

Incidentally, ordinary folks can invest in shares as well (they must if they want dividends) plus don't forget about the first 1500 euros of interest being free of tax (yes, I know, that's a pitifully low amount).

You touched a nerve there. I'd move in a heartbeat, but the wife doesn't want to uproot the family!