Moving away from Germany to Portugal. Abmeldung.

25 posts in this topic

Dear All,

 

I have a German citizenship, and have been studying / working here for the last several years.

At some point, I've decided to move to Portugal where my girlfriend is also is.  

 

My questions are following: 

1) I am employed with a large organization (which I am about to quit), working online during last 4.5 years. The notice period is 3 months, but I believe I'd have to negotiate it down to officially spend less than 6 months in Berlin. Afterwards I'd like to apply for ALG (60% of net salary) related to reallocation and change of residency. 

2) I've made some capital gains in February (25% already collected by trading broker). Assuming I move away to Portugal now, can I claim them back (since for 2021 I am tax liable towards Portugal, not Germany)? And if yes, when shall I do so - now with broker, or in 2022 with tax declaration (FA Germany)?  

3) Most important - how to make Abmeldung properly? I am not in Germany, and will prefer to do it by post if possible. Any hints on the forms to submit?

4) I still have a rental contract in Berlin, and would like to keep the place on my name (Ferienwohnung) which I can visit for a couple of months per year. Is there a way German FA can make a trouble out of it? 

5) What are the 'hidden' things to watch while making sure I am properly 'abgemeldet' from Germany? Shall I terminate mobile phone line, internet and electricity contract as well, or is it not obligatory (to be honest it's a time investment assuming I have a few flats in Berlin, which I'll rent out of course officially).  

 

What's really important for me is that for 2021 I am the tax resident outside of Germany for tax reasons (and after checking a few places in the EU, Portugal appeared as a first choice to me - I am here since December already and love it).  

 

Thank you in advance big time! 

1

Share this post


Link to post
Share on other sites

1) As far as I know, you have to be on ALGi already for maybe a month before you can apply to have your benefits transferred to Portugal based on looking for work there.  If accepted, you can register as unemployed in Portugal within 7 days of arriving there and get German ALGi for up to 3 months.  After 3 months, you either move back to Germany and continue your benefits here or you stay in Portugal and your benefits stop. See https://europa.eu/youreurope/citizens/work/unemployment-and-benefits/transferring-unemployment-benefits/faq/index_en.htm

 

4) The law about not leaving an apartment standing empty only applies to owners, not tenants, see https://www.faz.net/aktuell/wirtschaft/wohnen/haus/welches-recht-gilt-fuer-den-leerstand-von-wohnungen-15631770.html

2

Share this post


Link to post
Share on other sites

Many many thanks for your reply! 

 

On a separate note, my main question that will drive the decision of reallocation is: 

 

Assuming I've already moved my center of living to Portugal (flat, registration, marriage etc - lots of proofs), but still working distantly online (being employed with German company), does it mean that for 2021 I will have to pay taxes (already deducted) to Germany related to work income, and taxes to Portugal related to any other income (capital gains, stocks, crypto etc.) ? 

 

So far lawyers are either hesitating to answer it, since it might be binding for them. I want to ask someone's non-binding opinion / experience. Many thanks in advance! 

0

Share this post


Link to post
Share on other sites

Disclaimer: not an accountant, but this is how I understand it.

If you move before July, you will have to present your final taxes in Portugal. The withheld taxes in Germany will have to be returned to you, so you can pay them in Portugal.

If you move after Jun (I have experience in this case), you need to declare it in Germany, but here lies the tricky part: you will need to inform all entities in Portugal NOT to withhold any taxes, because otherwise you will never get your money back.

This means:

- your company's accountant in Portugal must have 0% taxes on the pay slip. Yes, it's possible, I've done that.

- your Portuguese bank must be informed NOT to withheld taxes from capital gains. This one is easy: just don't move your stocks and crypto to the Portuguese bank, keep them in Germany for the 1st year.

1

Share this post


Link to post
Share on other sites
1 hour ago, MikeMelga said:

Disclaimer: not an accountant, but this is how I understand it.

If you move before July, you will have to present your final taxes in Portugal. The withheld taxes in Germany will have to be returned to you, so you can pay them in Portugal.

If you move after Jun (I have experience in this case), you need to declare it in Germany, but here lies the tricky part: you will need to inform all entities in Portugal NOT to withhold any taxes, because otherwise you will never get your money back.

This means:

- your company's accountant in Portugal must have 0% taxes on the pay slip. Yes, it's possible, I've done that.

- your Portuguese bank must be informed NOT to withheld taxes from capital gains. This one is easy: just don't move your stocks and crypto to the Portuguese bank, keep them in Germany for the 1st year.

 

@MikeMelga

 Don't quit your day job ;)

 

OP, please read articles 4, 6, 10, 11, 15 and 24 of the double taxation agreement between Portugal and Germany: https://www.bundesfinanzministerium.de/Content/DE/Standardartikel/Themen/Steuern/Internationales_Steuerrecht/Staatenbezogene_Informationen/Laender_A_Z/Portugal/1982-02-13-Portugal-Abkommen-DBA-Gesetz.pdf?__blob=publicationFile&v=3

5

Share this post


Link to post
Share on other sites

 

Retaining various properties and renting them out in Germany in absentia could be tricky. The FA will want their cut and do their best to classify you as partially tax liable in Germany (begrenzt steuerpflichtig). Your point 5 would also give them ammunition.

 

Have you tried this man? Saw him live in action a long time ago and made a note to myself that he would be the guy I would use, should the need ever arise.

 

https://www.toytowngermany.com/forum/topic/30645-expattax-thomas-zitzelsberger-english-speaking-tax-advice-available-to-clients-germany-wide/

1

Share this post


Link to post
Share on other sites

There are two seriously expert accountants on TT for expats - the above cited Mr Zitzelsberger and PandaMunich ( a Ms).😊

Both enjoy a formidable reputation on here.

 

I am a professional independent insurance broker and authorised advertiser. Contact me.
2

Share this post


Link to post
Share on other sites
4 hours ago, PandaMunich said:

Panda, with all respect, I spent 1 year dealing with problems with double taxation. The simple truth is you can't claim back taxes withheld in Portugal to pay taxes in Germany. Trust me on this. The simplest solution is to tell the company's accountant in Portugal to NOT withheld taxes.

0

Share this post


Link to post
Share on other sites
3 hours ago, MikeMelga said:

Panda, with all respect, I spent 1 year dealing with problems with double taxation. The simple truth is you can't claim back taxes withheld in Portugal to pay taxes in Germany. Trust me on this. The simplest solution is to tell the company's accountant in Portugal to NOT withheld taxes.

 

You don't say - a whole year ;)

 

Well, in that case you will have no problem understanding the double taxation agreement (DTA) between Germany and Portugal and then this lovely brief 97 page document about just article 15 of the DTA, i.e. about the "Steu­er­li­che Be­hand­lung des Ar­beits­lohns nach den Dop­pel­be­steue­rungs­ab­kom­men" = "Tax treatment of wages under double taxation agreements": https://www.bundesfinanzministerium.de/Content/DE/Downloads/BMF_Schreiben/Internationales_Steuerrecht/Allgemeine_Informationen/2018-05-03-steuerliche-behandlung-arbeitslohn-doppelbesteuerungsabkommen.pdf

 

I am an engineer and a Steuerberaterin, you are just an engineer. 

You mean well, but I can't in good faith let you mislead the OP or the next reader who comes along.

 

*************************************

 

The OP will have unlimited tax liability in Germany until the day he moves away, and limited tax liability with his German rental income after that.

From the date he moves to Portugal with the intention to stay, he will have unlimited tax liability in Portugal, i.e. will get tax residency there.

This is called split-year treatment.

 

If he keeps a flat available to him in Germany, Germany can question whether he really moved his "Mittelpunkt der Lebensinteressen" (=centre of vital interests) to Portugal, especially since he is not married to his Portuguese girlfriend and this would mean that his tax residency in Germany would not end with his move.

But let's assume he does this properly and gives up that flat and only keeps flats in German that are not available to him, i.e. which are rented out.

Then we have a simple case of split-year treatment, as explained above.

 

So no, this is not about June/July.

No, he will not get back the German tax on his salary if he moves by June, since Germany has the taxation rights on his pre-move salary.

And no, he does owe Portuguese income tax on his post-move salary that he gets from his German employer, since with his new tax residency being in Portugal, he doesn't fall under the exception rule of article 15 (2) of the double taxation agreement (DTA) between Germany and Portugal, instead he falls under the standard rule of article 15 (1) of the DTA. Which states lthat Portugal as his state of residence gets to tax his post-move salary. Only for those days after his move, on which he returns to Germany on business trips and works while physically in Germany, does the tax taxation right get taken away from Portugal again and given to Germany.

 

Taxation of his capital income (interest, dividends, profit from selling stocks/funds/bonds/options, and so on) also goes by where he is resident as defined in article 4 of the DTA.

So until he moves away from Germany, Germany has the taxation rights on his worldwide capital income earned until the moving date, i.e. on his pre-move capital income.

Portugal has the taxation rights on his post-move worldwide capital income, i.e. on the capital income he earned starting with the moving date.

He should of course tell all his worldwide banks his new Portuguese address when he moves, so that they know his tax residency moved from Germany to Portugal and so that, for example, his German bank knows to no longer to deduct Abgeltungsteuer and Solidaritätszuschlag.

Banks in over 100 countries have to inform the tax department of his country of residence about the capital income he had: https://www.toytowngermany.com/forum/topic/361434-taxation-of-currency-transactions/?do=findComment&comment=3477275

 

He will always have to tax his German rental income in a German tax return.

6

Share this post


Link to post
Share on other sites

Panda, I of course can't follow all your technical background, but what I can tell you back in 2013 is I was entitled to receive back withheld taxes from Portugal and pay them in Germany. I even found the Portuguese forms to proceed with that and had confirmation of Portuguese tax authorities, after spending weeks with them. What I learned is that what is on paper is not really relevant for Portuguese tax authorities, because you face the "internal regulation" problem. Meaning they have internal regulations that impose themselves over the law. I know it's illegal, but it's how it happens. And the rule in Portugal is that if you pay undue taxes, you won't get them back because local finanzamt will fight in court even knowing they are not right.

So it's much easier to ask the company NOT to withheld taxes (this is legal) and then make adjustments by the end of the year.

1

Share this post


Link to post
Share on other sites
17 hours ago, PandaMunich said:

 

You don't say - a whole year ;)

 

Well, in that case you will have no problem understanding the double taxation agreement (DTA) between Germany and Portugal and then this lovely brief 97 page document about just article 15 of the DTA, i.e. about the "Steu­er­li­che Be­hand­lung des Ar­beits­lohns nach den Dop­pel­be­steue­rungs­ab­kom­men" = "Tax treatment of wages under double taxation agreements": https://www.bundesfinanzministerium.de/Content/DE/Downloads/BMF_Schreiben/Internationales_Steuerrecht/Allgemeine_Informationen/2018-05-03-steuerliche-behandlung-arbeitslohn-doppelbesteuerungsabkommen.pdf

 

I am an engineer and a Steuerberaterin, you are just an engineer. 

You mean well, but I can't in good faith let you mislead the OP or the next reader who comes along.

 

Dear Panda, 

 

thank you so much for your efforts! Not just from my side (regarding the described above situation), but from all the future forum readers!

 

For all those who are interested: I've already registered in Portugal (as I factually live here since 2020), and my core priority is now to get the desired 'abmeldung' from Germany as soon as possible to reduce the period that can be considered as overlapping tax residency.

 

German employer still wants me to perform some activities, but to be on the safe side I'd prefer to discontinue employment as soon as possible - even taking the substantial financial loss. I am aware that receiving the payment from German employer does not automatically make me a tax resident there, but nevertheless would prefer to have as little questions from FA as possible, and have my employment period ending before mid-June. 

1

Share this post


Link to post
Share on other sites
23 hours ago, MikeMelga said:

Disclaimer: not an accountant, but this is how I understand it.

If you move before July, you will have to present your final taxes in Portugal. The withheld taxes in Germany will have to be returned to you, so you can pay them in Portugal.

If you move after Jun (I have experience in this case), you need to declare it in Germany, but here lies the tricky part: you will need to inform all entities in Portugal NOT to withhold any taxes, because otherwise you will never get your money back.

This means:

- your company's accountant in Portugal must have 0% taxes on the pay slip. Yes, it's possible, I've done that.

- your Portuguese bank must be informed NOT to withheld taxes from capital gains. This one is easy: just don't move your stocks and crypto to the Portuguese bank, keep them in Germany for the 1st year.

 

Dear Mike, many thanks for your reply as well! 

 

I am so far not planning to work in Portugal in 2021, but might get a few months of an equivalent of ALG-1 (if the hustle worth it - I still did not find the Portuguese lawyer who will handle that for me). 

0

Share this post


Link to post
Share on other sites
3 hours ago, Martin Wasser said:

German employer still wants me to perform some activities, but to be on the safe side I'd prefer to discontinue employment as soon as possible - even taking the substantial financial loss. I am aware that receiving the payment from German employer does not automatically make me a tax resident there, but nevertheless would prefer to have as little questions from FA as possible, and have my employment period ending before mid-June. 

 

While there may be a perfectly good reason for this stance, it never ceases to amaze me that some people get so focused on tax that they think foregoing the 70% to save the 30% is a good idea.  Similarly with expenditure.  I don't really need this but I can set it against my tax - spend 100 I don't need to to save 30. 

 

0

Share this post


Link to post
Share on other sites
1 minute ago, GaryC said:

 

While there may be a perfectly good reason for this stance, it never ceases to amaze me that some people get so focused on tax that they think foregoing the 70% to save the 30% is a good idea.  Similarly with expenditure.  I don't really need this but I can set it against my tax - spend 100 I don't need to to save 30. 

 

Totally agree, but I am not a sparfuchs:)


Just I always tried to think and act in a way that my salary is not my main source of income. I am in crypto world too: we are in the mid of the bull-run now, but at some point it will be important to take the profits and step away for the next 3.5 years. Understanding and navigating economic cycles (incl Kondratieff) are more important for my decision making comparing to career achievements. 

0

Share this post


Link to post
Share on other sites
13 hours ago, MikeMelga said:

Panda, I of course can't follow all your technical background, but what I can tell you back in 2013 is I was entitled to receive back withheld taxes from Portugal and pay them in Germany. I even found the Portuguese forms to proceed with that and had confirmation of Portuguese tax authorities, after spending weeks with them. What I learned is that what is on paper is not really relevant for Portuguese tax authorities, because you face the "internal regulation" problem. Meaning they have internal regulations that impose themselves over the law. I know it's illegal, but it's how it happens. And the rule in Portugal is that if you pay undue taxes, you won't get them back because local finanzamt will fight in court even knowing they are not right.

So it's much easier to ask the company NOT to withheld taxes (this is legal) and then make adjustments by the end of the year.

As another resident of a Mediterranean country I would like to support MikeMelga and explain how the law works here in the south:

 

1. Of course, there are agreements, and the government needs to honour them.

2. But the government employees are not trained to deal with complicated, non standard situations, they are afraid of making a mistake and get fired (German Beamte is not fired even if he rapes a goat in front of Cologne Cathedral***)

3. Sometimes you should push to get your rights recognized, and more often than not it involves suing the government office.

4. Then you win, and the government does what you asked them for because they do not have to make a decision, "the court said so".

 

This is why sometimes it makes sense not to do something which may cost you time and money.

 

This approach has advantages and disadvantages.

 

***it's exaggeration and a joke.

4

Share this post


Link to post
Share on other sites
10 hours ago, Martin Wasser said:

I am aware that receiving the payment from German employer does not automatically make me a tax resident there

Nor does an "Abmeldung" make you a non-resident in the eyes of the Finanzamt if they learn you still have an abode available to you being registered or not is merely an indication of your residence status as Boris Becker and others found out the hard way. My accountant at the time advised me to keep proof of that I really moved away (e.g. invoices of moving companies, boarding pass etc.). However, I've never been asked for it.

1

Share this post


Link to post
Share on other sites
8 hours ago, jeba said:

Nor does an "Abmeldung" make you a non-resident in the eyes of the Finanzamt if they learn you still have an abode available to you being registered or not is merely an indication of your residence status as Boris Becker and others found out the hard way. 

Totally true. 

I can add my 2 cents: I know someone managing 300m fund in Switzerland, thus, having a bunch of lawyers supporting him on every step to make sure everything is 200% compliant. He keeps a rented flat in Berlin under his name (not a company) with his surname on the doorbell, as he prefers to stay (which is normal in my opinion - I am btw not in favor of an idea that my own flat has to be rented out, but I will do that to avoid discussions with FA) in a flat rather that in a hotel spending his couple of vacations in Berlin each year. 

 

Then I ask: is that ok and legal? He says - 100%, as he will be able to proof with tickets / witnesses the amount of days he spent in CH: it's not even close to 6 months, it's way above. 

Myself too, I can bring the bank extract with transactions done in Portugal for like 300 days out of 365 days within a year, and various of other proofs. But I'd prefer to even avoid this discussion..

 

 

8 hours ago, jeba said:

However, I've never been asked for it.

Could you please share your experience:

Can deregistration be done by post? And do they require to attach a new address for their database? 

While moving away I guess you still had a few months of work performed in Germany during the transition year : did FA additionally enquire about other sources of income that year? 

 

Thank you! 

0

Share this post


Link to post
Share on other sites

For all those who is interested: 

 

The old formal rules (number of days) have been substituted in 2017 by different definition logic.

https://home.kpmg/xx/en/home/insights/2017/07/flash-alert-2017-123.html

 

In short its following: 

1) IF permanent home available --> Resident. IF Permanent homes available in both states --> Where personal and economic interest is closer? 

2) IF interests are hardly identifiable OR IF no permanent homes are available: --> where is habitual adobe (e.g. long-term rented hotel suite);

3) IF habitual abodes in both states OR none --> nationality;

4) IF both nationalities are present OR none --> mutual agreement. 

 

So for most cases it falls into the dimension of "personal and economic interests". Which are quite vague imo, in other words give unnecessary power to the states to attack their residents. 

0

Share this post


Link to post
Share on other sites

Ah, ok, then rules changed since I moved in, that clarifies the different understanding I had with Panda.

But this is weird. I do have permanent homes in Germany and Portugal. If I move to Portugal while working remotely for a German company, where am I taxed?

0

Share this post


Link to post
Share on other sites
On 23/3/2021, 23:41:09, PandaMunich said:

 

I am an engineer and a Steuerberaterin, you are just an engineer. 

 

 

There, I confess I got aroused :ph34r: 

0

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!


Register a new account

Sign in

Already have an account? Sign in here.


Sign In Now