German Tax Residency - 183+ days, or "registered"?

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Hi, I would like to confirm (with official sources, which I can't find online) Tax residency concepts for Germany:

 

1. Is it that if you live in Germany for 183 (or more) consecutive Calendar Days in a Tax (Calendar) year, you are a "Tax Resident" and taxable on your World Income

 

or

 

2. Is it that if you are REGISTERED (i.e. Anmeldung) in Germany (no specified days, even 1 day counts) in a given Tax (Calendar) year, you are a "Tax Resident" and taxable on your World Income?

 

Normally, it wouldn't matter, however in my particular situation, I might be leaving at end of June (making the total in 2019 tax year 181 days - under the "183" that I have heard of, which means I could gain a substantial refund (since my total income for 2019 would be low - based on 6 months of earnings, and my world income in the months after I leave would not be taxable).

 

Now, my finanzamt (only one person there, and over the phone) and Steuerberater mentioned that #2 is correct, however all over the internet I see that #1 is correct.

 

Please let me know which is the case, and what is the official source?

 

Thanks

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I may be wrong, but as I understand it, in your circumstances (given that you've settled here already, and aren't just arriving on January 1 and leaving June 28 or whatever), Germany will be considered your "center of life" for at least part of the tax year and you will be taxed accordingly.

 

That means when you file your tax return for 2019 early next year, you'll have to include your global income. You'll get credit for tax already paid, of course, but even if you don't end up paying German taxes on it, that income will at least bump your earnings to a higher tax bracket (this is called the Progressionsvorbehalt).

 

 

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How long have you been in Germany overall? The 183-day rule is generally applied to people who are sent here on temporary assignment, for projects or the like. If you work for a French company, for example, and are sent to Germany to work on a customer project for 3 months, then you won't become a tax resident. Generally, however, you become a tax resident as soon as you register a German residence and remain so until you deregister.

 

You could try to contest it, but the Finanzamt is very good at interpreting the applicable laws in their favor, even in cases that aren't as clear-cut as yours - see Munich vs. Boris Becker and Mannheim vs. Peter Graf (father of Steffi).

 

Like I said, however, I'm not an expert in such matters. Perhaps @PandaMunich will be kind enough to share her knowledge

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Overall one year as of end of June, working since late 2018, contract was permanent but now has June 30 end date.

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On 4/28/2019, 10:40:14, jonnypp said:

1. Is it that if you live in Germany for 183 (or more) consecutive Calendar Days in a Tax (Calendar) year, you are a "Tax Resident" and taxable on your World Income

 

or

 

2. Is it that if you are REGISTERED (i.e. Anmeldung) in Germany (no specified days, even 1 day counts) in a given Tax (Calendar) year, you are a "Tax Resident" and taxable on your World Income?

 

It's option 2:

https://www.toytowngermany.com/forum/topic/366908-doppelte-haushaltsführung-rent-exceeding-maximum-deduction-limit/?do=findComment&comment=3534421

 

On 4/29/2019, 10:10:05, El Jeffo said:

How long have you been in Germany overall? The 183-day rule is generally applied to people who are sent here on temporary assignment, for projects or the like. If you work for a French company, for example, and are sent to Germany to work on a customer project for 3 months, then you won't become a tax resident. Generally, however, you become a tax resident as soon as you register a German residence and remain so until you deregister.

 

Entirely correct :)

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My understanding is slightly different:

 

Rather it is a combination of 1 and 2. 

 

If you are a German taxpayer and resident, and you leave Germany within a period of less than half a year within a financial year (i.e. less than 183 days), and you then establish tax domiciliation in a foreign jurisdiction within that same year, you can claim that you are liable to be taxed in the country where you are registered as a tax resident for the majority of a calendar year, and not in other countries. 

 

It's not the case that you simply abmeld and then you're not a tax resident anywhere. To show that you are not liable for tax in Germany this year you'd have to show the Finanzamt proof of your tax residency elsewhere, and have abmelded within the 183 day limit. 

 

In practice, this means if you want to pay no tax in Germany this year you should establish yourself somewhere else.

 

If you move to your home country, you could claim tax residency there, and so likely you would be required to pay tax on your German income in that country (assuming your home country is not a tax haven). 

 

(On that note, if you wanted to pay zero tax, you could establish a freezone company in the United Arab Emirates (a country with no personal income tax) which grants you residency visas via the company licence, and then rent an apartment there, and have evidence that you are living there (e.g. water bills, phone bills). This of course would come with an enormous cost (i.e. company licences are expensive), rent is expensive, and you would have to 'be' there as well. Even at the end of all that there would also be a chance that the FA rejects this and considers you still a tax resident.)

 

There will be other country options, but these will involve actual relocation and permanent residency, not just shifting paper around. Moving to your original country would likely be the easiest way to do it, since you could travel there, probably establish tax residency for 2019 given you are a citizen, and (I would guess) then go on a long holiday. 

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Well, if I leave June 30 (day 181 <= 183), I would then send in some forms to my country to require them to determine my tax residence status there, and based on factors they determine non-resident or resident. This would be finalized by probably October/late 2019 (well before my 2019 German taxes).

 

This was my original plan (similar to what you suggested), however I have heard many posts on here (and my Steuerberater as well) claiming #2 from my original post: anyone who does Anmeldung here is a tax resident and fully taxable on world income.

 

This 183 day rule is very misleading, and no official German Finanz Website seems to even cite it.

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"anyone who does Anmeldung here is a tax resident and fully taxable on world income"

 

That is correct. 

 

If you cannot find the information you need, then suggest you obtain the services of a professional accountant, one that is specialised in expat tax affairs and ideally has gone through the process you're describing with prior clients. 

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4 hours ago, FashionField said:

If you are a German taxpayer and resident, and you leave Germany within a period of less than half a year within a financial year (i.e. less than 183 days), and you then establish tax domiciliation in a foreign jurisdiction within that same year, you can claim that you are liable to be taxed in the country where you are registered as a tax resident for the majority of a calendar year, and not in other countries. 

 

Wrong.

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6 minutes ago, PandaMunich said:

 

Wrong.

 

I agree and will basically assume I will be a tax resident this year, purely because I am registered in the country.

 

Is there an official German source confirming the determination of tax residency? Everything I have read has been on third party websites.

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13 hours ago, PandaMunich said:

§1 (1) Satz 1 EStG:  https://www.gesetze-im-internet.de/estg/__1.html

--> Definition of "Wohnsitz" §8 AO:  https://www.gesetze-im-internet.de/ao_1977/__8.html

 

Thanks, also wondering about the rules, is it:

 

A. Average tax rate on World income (higher) is applied to the German Income (lower)

or

B. Averge tax rate on the German Income (lower) is applied to the World Income (higher)?

 

And, at what point is the tax paid in your home country "credited/paid back" to you by Germany? My country does have a treaty, some sources say that the credit-back is only if there is no treaty, however this is another very unclear point.

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15 hours ago, PandaMunich said:

 

Wrong.

 

So you believe that if a person permanently leaves Germany on the 2nd of January to a different country where they establish themselves, they maintain no enduring connections to Germany or any apartment etc here, they're still liable to be taxed in full for their (overseas) income in that year in Germany?

 

(Not withstanding double tax agreements, given that the country that they move to will no doubt consider them a a tax resident and expect them to pay income tax.)

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3 minutes ago, FashionField said:

 

So you believe that if a person permanently leaves Germany on the 2nd of January to a different country where they establish themselves, they maintain no enduring connections to Germany or any apartment etc here, they're still liable to be taxed in full for their (overseas) income in that year in Germany?

 

(Not withstanding double tax agreements, given that the country that they move to will no doubt consider them a a tax resident and expect them to pay income tax.)

 

That is what my Steuerberater ("even 1 day of registry") and many online sources say.

 

Also, the definition of "habitual abode" is also hard to pinpoint. If an employee is living and registered somewhere (which they would be as a default), but planning to leave because a job wasn't what they wanted, or otherwise, they would simply leave...it wouldn't be habitual abode. Yet under the rules, any registration is habitual abode, which makes some sense since registration is required for people who will regularly live in the country and are not on a tourist visa.

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9 minutes ago, jonnypp said:

Also, the definition of "habitual abode" is also hard to pinpoint.

Only if you want to be deliberately obtuse. The definition under the law, on the other hand, is quite clear.

 

10 minutes ago, jonnypp said:

planning to leave because a job wasn't what they wanted, or otherwise, they would simply leave...it wouldn't be habitual abode

Yes it would, right up until the time they leave.

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On 4/30/2019, 5:54:21, jonnypp said:

This 183 day rule is very misleading,

It´s not as clear-cut as it sounds anyway. It´s merely relevant to establish your habitual abode. However, you´ll be taxed on your worldwide income even if your habitual abode is abroad if your center of vital interest is regarded to be in Germany (e. g. because your family is residing there) or if you´re keeping a place of residence (and even a caravan may be regarded a place of residence).

IIRC what my tax consultant told me before I left Germany whether you´ll be taxed by Germany if you spend less than 183 days in Germany depends on what the agreement on the avoidance of double taxation between Germany and your country of residence is stipulating. So you need to check that. In case of doubt I suggest you ask a "Fachberater für internationales Steuerrecht" (tax consultant specialising in international tax law). You´ll find those residing in Berlin here (choose the relevant country from the drop down menu "Arbeitsgebiete")

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On 4/29/2019, 8:57:02, jonnypp said:

What is the 183 day rule and who enforces it?

Enforcement is what I found missing. Since I left Germany my tax consultant never even asked me whether / for how long I had stayed in Germany. So I guess the Finanzamt doesn´t ask.

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1 hour ago, jeba said:

It´s not as clear-cut as it sounds anyway. It´s merely relevant to establish your habitual abode. However, you´ll be taxed on your worldwide income even if your habitual abode is abroad if your center of vital interest is regarded to be in Germany (e. g. because your family is residing there) or if you´re keeping a place of residence (and even a caravan may be regarded a place of residence).

IIRC what my tax consultant told me before I left Germany whether you´ll be taxed by Germany if you spend less than 183 days in Germany depends on what the agreement on the avoidance of double taxation between Germany and your country of residence is stipulating. So you need to check that. In case of doubt I suggest you ask a "Fachberater für internationales Steuerrecht" (tax consultant specialising in international tax law). You´ll find those residing in Berlin here (choose the relevant country from the drop down menu "Arbeitsgebiete")

 

Ok, so the '183' number comes from some countries' treaties? Rather than general rule?

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