Inbound counseling for foreigners with income in Germany

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.