Inbound counseling for foreigners with income in Germany

Foreign private individuals can be subject to limited taxation in Germany with so-called domestic income. These can be cross-border commuters who are employed or freelancing in Germany but do not live there. The same goes for foreigners with real estate ownership in Germany or other German "sources of income". Artists and athletes active in Germany or members of the supervisory board of German companies also belong to this category of those with limited tax liability and can therefore be taxed by the German tax authorities - even if they are not residing in Germany. Certain rules and restrictions in the German Income Tax Act apply to this limited tax liability, on which we provide detailed advice and support you.

From our range of services for limited tax liability:

  • Consulting and preparation of German income tax returns for tax non-residents
  • Consulting regarding taxation of real estate investments in Germany
  • Consulting regarding withholding taxes for artists, athletes, supervisory boards and license and right holders
  • Implementation of tax refund procedures for withholding taxes (Federal Central Tax Office)

With a lot of commitment, we are your contact for limited tax liability in Germany. We perform consulting on investments in Germany in advance and take care of all tax returns and communication with the German tax offices for you!

Persons with limited tax liability are only taxed on their domestic income in Germany. A number of tax reliefs (tax-free allowance, splitting tax rate (tax rate for separate taxing of husband and wife), child tax allowance, etc.) cannot make use of these, as these are determined by the system guided by the personal performance of the taxpayer with unlimited tax liability (worldwide income principle).

Germany has a worldwide network of DTAs. Nevertheless, there are countries with which there is no double taxation agreement. In these cases, only national credit regulations or administrative guidelines, such as the Decree on Employment abroad, may be referred to avoid double taxation.

Taxpayers subjected to unlimited tax liability having relatives in other EU / EEA countries are treated on equal terms with domestic taxpayers subjected to tax liability through a series of special regulations (§ 1a Income Tax Act).

These include:

  • Application of the splitting tax-rate for spouses living abroad, provided they are not permanently separated.
  • Consideration of maintenance payments to the separated or divorced spouse (real splitting)

For taxpayers with limited tax liability, there are regulations on certain income for the payer to deduct a tax of 15% - 30%. Tax is generally to be deducted for foreign taxpayers who earn certain income. The withholding tax is usually based on the turnover, since professional expenses do not always play a role in this procedure. However, it is possible to Absatz von Kosten (turnover of costs) by submitting an application to the Federal Central Tax Office (tax refund procedure) or an assessment option for persons with limited tax liability from EU / EEA countries.

 

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