apel

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About apel

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  • Location Heidelberg
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  1.   The principle is correct, though your quoted tax rates look too high. It depends on circumstances, but I think the basic tax rate would be about 18% on 50k and 28% on 100k.   Solidarity surcharge and church tax (if relevant) would be in addition.   In a specific example, where the taxable income 50,000 euros (tax rate 26 percent) and the revenue from Progressionsvorbehinderung once again 50,000 euros, the tax rate increases according to the tax table to 34 percent, as it is based on a total of 100,000 euros. However, this rate is only applied to the taxable 50,000 euros. However, these are not taxed at the tax rate of 50,000 euros (26%), but at the tax rate of 100,000 euros (34%).       I'm not sure, but I guess this might be in the situation where you leave Germany before living here 6 months. My understanding is that you normally become tax resident on registering.
  2. The 42% and 45% tax rates that you quote are the marginal tax rates at that level of income.   What is relevant to Progressionsvorbehalt are the actual tax rates (as a percentage of income). Because the system is progressive, these are much lower than the marginal rates.   You can use the calculator to find these, or if you search Toytown, you will find a useful graph often posted by PandaMunich which clearly illustrates the difference.
  3. Progressionsvorbehalt is defined by Article 23, paragraph 1 sub-paragraph d of the Germany/UK double taxation agreement, linked in my earlier post. It states simply: Germany, however, retains the right to take into account in the determination of its rate of tax the items of income and capital which are under the provisions of this Convention exempted from German tax. It works like this:   Germany has a progressive tax system - the tax rate increases with the amount of income. If you have say 20000 € of income taxed in the UK and subject to Progressionsvorbehalt, and 30000 € of income taxed in Germany, the percentage tax rate applicable to the German income will be that relevant to an income of 50000 € and not 30000 €.   There's a lot of detail in Toytown - do a search.   With specific regard to Progressionsvorbehalt following a sale of a property, PandaMunich has described details of a relevant court judgement in the thread Moving from UK to Germany in 2019 - tax question    
  4.   That is generally true, but not for everything.   It is all dependent on the double taxation agreement between the two countries, which assigns taxation rights depending on the type of income or profit.   In the case of the Germany/UK agreement, most income is taxed in the country of residence, but for example income or gains from property is taxed in the country where the property is. Various other income is assigned to the UK - it's complicated.   The agreement is here: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/498350/germany_dtc_-_in_force.pdf It's worth reading carefully.   A couple of other points:   As my UK pensions are taxed in the UK (this doesn't apply to all pensions), I get the advantage of the tax-free allowance in both countries.   But I mentioned Progressionsvorbehalt in my earlier post. This results in a higher tax rate on income taxed in Germany in consequence of other income which is taxed in the UK. This can make quite a difference to German tax.
  5. My understanding is:   Under the double taxation agreement between Germany and the UK, for tax residents of Germany, the UK has the taxation rights over capital gains from the sale of property in the UK.   However, as you've resided in the property, you won't be charged UK tax for the gain in respect of that period. Furthermore, if you have ever resided in the property, you won't be charged for the last 18 months of ownership. So, there shouldn't be any UK tax payable if you complete the sale within 18 months of moving.   Although the UK has the right to tax capital gains, there is the possibility that Progressionsvorbehalt might apply in Germany. This would not directly tax the gain, but would take account of the gain in determining the tax rate applicable to your other income taxable in Germany. However, I think that this would not apply in your case, as you resided in the property - possibly subject to conditions.
  6.   If you have state pension entitlements in more than one EU country, you have to claim in the country of the last entitlement. They will then approach the authorities in all the other countries, and each country then has the information to calculate the entitlement in that country.   But each pension is then paid by the country in which it was earned.   After Brexit, the situation may change as far as UK pensions are concerned.   So SusieT has entitlement only in the UK, and must claim it in the UK. Brexit will not change that.