U.S. Disabaled Veteran [Medically Retired]

2 posts in this topic

Hello all!


I wanted to ask a few questions on my situation. I was working for a company under the SOFA agreement and recently quit to work for another company. Well it turns out that the company cannot have me under the SOFA agreement and I have another 35 days to decide if I want to switch to the German system or go back stateside until I find employment under the SOFA agreement again. With that being said, I wanted to understand what kind of taxes will I be looking at with switching to the German system. What taxes will I be liable to pay for Germany if I do end up getting a work VISA to work here with the American government.


My other question is regarding my VA disability compensation. I am considered retired from the Army, but medically. Which means, that I do not get any retirement pay other than my VA disability compensation, but I do have health insurance through TRICARE. Would my Disability compensation be taxed, even though it is not taxable in the U.S.? I was reading up on the Tax treaty and my understanding of it, is that Germany wouldn't tax something that the American government does not tax. Also see below, a paragraph from the IRS:


Government Service; Social Security
a) Wages, salaries, and similar compensation and pensions paid by the United States or
by its states or political subdivisions to a natural person, other than a German national, shall be
exempt from tax by the Federal Republic of Germany.


I bring up the disability issue because although I do work sometimes, I cannot really hold employment for too long(I have been trying), as I have been jumping around from positions to others. I have a lot of medical issues that really put a toll on my ability to work, but not all the time.


For those who ask why I want to stay in Germany, well I have been here for over 5 years and I kind of feel attached already(Somewhat home). I really have nothing back in the states, all of my family moved back to Puerto Rico and Dominican Republic and have no other real reason why to go back.


I just want to get some clarification and hopefully some sort of understanding from other individuals that may have gone through the same process or know any information about this. I tried contacting so far, 3 different German lawyers and I did not get much help(None seemed to speak English, yes I was being nice, my German is not that great, still taking German classes).


Can anyone confirm this information or has any experience on this? Thank you very much in advance!




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On 25.5.2018, 13:10:54, Rotaryboost said:

Can anyone confirm this information or has any experience on this? Thank you very much in advance!





Your understanding is correct.  Germany may not tax you on your VA disability pension.  It may, however, add the value of the pension to income otherwise taxable in Germany to increase the rate of German income taxation.  This is called Progressionsvorbehalt and is expressly permitted under the treaty.


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