Double Taxation Agreement conundrum

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Hi,

 

I would really appreciate help with this.

 

I am a non-EU citizen with residence in Germany for 3 years already. I work at a research institution which sent me for a bit less than a year to China for work purposes (18.09.2018 to 01.08.2019). During that time, my German employer kept paying my wages, but following the rules established in the Double Taxation Agreement, the Chinese side was entitled to taxation. My employer provided me with a document entitled "Bescheinigung Gemäss Deutsch-Chinesischem abkommen über Sozialversicherung'. Now, in my Lohnsteuerbescheinigung for 2019, I have a sum in number 16a (Steuerfreier Arbeitslohn nach/ Doppelsteuerungsabkommen (DBA)), and I am having trouble about where to declare it.

 

I faced a similar situation last year, which got fixed after submitting an appeal and large amounts of evidence to the Finanzamt. But I would like to do it properly this year, I have sought advice with experts, but I keep getting conflicting information (whether I need Anlage AUS or N-AUS).

 

Can anyone provide a clearer take on this? I would greatly appreciate it!

 

All the best!

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@pampuero

 

There may be some confusion as to which of two treaties you are concerned with.  You mention two:

 

1.  The "Double Taxation Agreement" (Ab­kom­men zwi­schen der Bun­des­re­pu­blik Deutsch­land und der Volks­re­pu­blik Chi­na zur Ver­mei­dung der Dop­pel­be­steue­rung auf dem Ge­biet der Steu­ern vom Ein­kom­men und vom Ver­mö­gen)

https://www.bundesfinanzministerium.de/Content/DE/Standardartikel/Themen/Steuern/Internationales_Steuerrecht/Staatenbezogene_Informationen/Laender_A_Z/China/2015-12-29-China-Abkommen-DBA-Gesetz.pdf?__blob=publicationFile&v=3

 

and

 

2.  The Deutsch-Chinesisches Abkommen über Sozialversicherung

 

https://www.bgbl.de/xaver/bgbl/start.xav?start=//*%5B@attr_id=%27bgbl202s0082.pdf%27%5D#__bgbl__%2F%2F*%5B%40attr_id%3D%27bgbl202s0082.pdf%27%5D__1596200769470

 

 

Two different treaties.  Two different topics.  Two different results.

 

For income tax purposes your wages were German tax free because you were employed in China in excess of the 183 day limit provided by Article 15 (2) of the DTA. Consequently, those wages were taxable as provided by Art. 15 (1):  in China only.

 

Social security contributions are a different story and are governed by the social security treaty. That treaty provides as follows:

 

Article 4 Compulsory coverage in case of detachment

 

When an employee who is employed in one Contracting State is sent by his employer to the territory of the other Contracting State in the context of that employment to perform services there for that employer, only the legislation on compulsory coverage of the first Contracting State shall continue to apply with regard to that employment during the first forty-eight calendar months as though the employee were still employed in the territory of the first Contracting State.

 

So, German income tax free but you still have to fork over the Sozialabgabe to Germany on the tax-free income.

 

 

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