Taxation by Citizenship and/or Residency

Legal Taxes
1

Getting quite off-topic here, but some parties in Germany actually have it on their agenda to introduce taxation based on citizenship. Why? Well, apparently too many (highly-qualified) people leaving the country and not paying taxes anymore. I wonder why…

Guess what? Germany again, too. They also don’t generally allow dual-citizenship.

Oh, and some online banks are also known for not wanting to open normal accounts for resident foreigners who don’t have permanent residence. Also, people with „foreign“ names (doesn’t matter if they‘re citizens or not) have it even more difficult to find a place to rent because some landlords don’t like renting to them.

At the same time, politicians keep saying how they need to make the country more attractive for foreign workers in order to fill the skill gap in the workforce. But still, almost all government services are available in German exclusively…

Sounds familiar…?

(That’s why I am not that „enraged“ about some of those things in Taiwan actually. Honestly speaking, a foreigner coming to Germany might unfortunately make similar experiences there. Maybe not that much discrimination by the government like Taiwan does with the stimulus vouchers, … - but overall, I feel crying out about those things as a German in Taiwan would be a bit hypocritical in some way… Does it make it better? Not in any way. But still - it’s not only a „Taiwan issue“ unfortunately…)

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Quite honestly the language isn’t the problem…

Also, did I say I was from Germany…? Do you know what Germany was doing during WW2? Does not exactly have a “foreign friendly” history so to speak…

Also you mention

Note the ‘permanent residence’ part… Taiwan doesn’t even treat ‘permanent residents’ any better to ‘temporary residents!’

3

Do you know the reason America started taxing citizens abroad?

It was because of the 1860 civil war when Americans started fleeing abroad and the government wanted to punish them. I doubt a similar law will pass in Germany. And yes… I have been interested in it.

4

At least Taiwan allows me to file my taxes in English. That would be unheard of in some European countries.

No - you’re from Australia, right?

I just wanted to give another perspective: My point was more that - unfortunately - it’s not Taiwan that’s the exception because they treat foreigners like that. It’s more like other countries are the exception which do not have these kinds of issues…

5

What they will most likely do it tweak the tax residency requirements to make it more likely that you are automatically considered a tax resident. For example… own a house in Germany that’s not rented? You are a now tax resident

6

Oh, that’s already the case. As soon as you have some kind of “residence” available for you (could be a house/flat you own, a room in your parents home, …), you’re a tax resident. No matter how many days you stay or something. But still, they want to keep pushing for more…

7

That’s all well and good. BUT if I were given a choice. “File using a dodgy translated online system with unfair tax residence requirements” (183 days every year because the tax authorities don’t consider you as ‘domiciled’ or file with the same convenience as locals…
I would choose the latter.

Also… you can use google translate for many web pages now. And… you can always go into the office or hire someone who can speak English to file your returns. (Cheap in those sorts of European countries)

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9

Germany - Individual - Residence.

Found what you may be referring to…

But it is explained here…

“In general a stay of only up to two month per year does not lead to tax liability in Germany.”

So no. Owning a house or parents house doesn’t (automatically) make you a German tax resident… Yet… Unless you frequently stay in it. Multiple times a year or more than 2 months in a year.

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See the law: Abgabenordnung (AO) § Wohnsitz:

Einen Wohnsitz hat jemand dort, wo er eine Wohnung unter Umständen innehat, die darauf schließen lassen, dass er die Wohnung beibehalten und benutzen wird.

(Non-legal) Translation:

A person has a residence where he or she maintains a dwelling under circumstances that indicate that he or she will keep and use the dwelling.

If you have a dwelling (which is available to you to stay - so not rented out) with the intent of keeping it, you are a resident in Germany for tax purposes!

That does not apply if you have a dwelling available to you beyond that time. In Germany, it’s either presence or residence which can trigger tax residence!

Also see: Deloitte Tax-News: Wohnsitz (§ 8 AO) und gewöhnlicher Aufenthalt (§ 9 AO)

A person has possession of an apartment if he or she has actual power of disposal over the apartment. The apartment must be visited with a certain regularity. This can also be done at longer intervals. However, a minimum period of residence per year is not required. If an apartment is only visited occasionally, for example for visiting and recreational purposes, this is not sufficient. In cases of occupational stays abroad, the possession of an apartment can be presumed if the apartment is maintained in Germany, its use is possible at any time and it is appropriately equipped as an apartment.

So if you work abroad for maybe 2 years and keep your house in Germany without renting it out, you’re still a tax resident of Germany. Even when not setting foot into Germany once during those two years, for example!

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und benutzen wird

I take that to mean if it is clear you do not use or will not use that house as a domicile, whether you rented it out or not, you are not a tax resident, necessarily.

1 Like
12

Exactly my point. It has to be a place you “frequently use” AND have available to you. @qwert_zuiop I suggest you seek help from a licensed tax agent in Germany who could better explain it to you.

For example, you have a bedroom at moms house. You have your clothes, computer, bedding etc in that room and it’s yours and you come back every week/month to visit. Then you are a tax resident.

Or you own a house and you rent it as an airbnb but sometimes you use that house when you return to Germany on frequent short stays…

However, frequency is the key… If it’s only a couple of times a year then no!

Also one final thing I may add. The rules are irrespective of if you are a German national or not! This means that from what your saying… having a friend who offers you a room to stay at his house makes you a tax resident of Germany… utter BS

13

There is no law that protects you from becoming a tax resident in this case. If you keep an apartment in Germany and visit regularly, you can become a tax resident.

See the case of famous German tennis star Boris Becker:

The calculation of simply staying in Germany for less than 183 days does not always work out. The tax authorities also pay attention to the overall circumstances and want to exclude attempts at evasion. These can already be assumed if shorter domestic visits of less than 6 months follow each other several times. Then a factual connection and a continuation can be assumed.

Ex-tennis star Boris Becker, for example, had to experience the consequences of this. He lived in Monaco and was careful not to stay too long during his multiple stays in Munich. But he had a key to his sister’s apartment, where he stayed each time. This was his undoing: back taxes and a 2-year suspended prison sentence plus a half-million euro fine.

It also depends on the qualifying circumstances. These can also be present if there is a closet full of clothes in the former children’s room of the parents. More harmless is the stay in a hotel. However, if the same room is always booked, this can also be considered as a usual stay.

The law doesn’t require “frequent”, but “regular” use - that’s a difference!

And then good luck discussing with the tax authorities if two months in total (maybe spread out over four visits in a tax year) count as “regular use” or not. Like the other article said: “However, a minimum period of residence per year is not required”. That’s how the law is written - any “two month” rule or something like you quote already depend on the working practice of the tax authorities…

You need to have power of disposal over that room. So yes: If your friend gives you the key to the apartment and to the room (with its own kitchen and bathroom) for you to use at your disposal and you plan to use that room “regularly” on a permanent basis - then yes, you can become a tax resident of Germany (of course, if you’re not a citizen an lack an appropriate visa, it’s quite easy to argue that you’re in fact unable to use that room as a residence…).

Also, Germany has many double-taxation treaties and there are exceptions: So in practice, even becoming a tax resident in Germany does not mean you’ll actually be liable for taxes in the end!

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“A person owns an apartment if they actually have the power of disposal over the apartment. the apartment must be visited with a certain regularity. This can also happen at longer time intervals. However, a minimum length of stay per year is not required. If an apartment is visited only occasionally, for example for visiting and recreational purposes, this is not sufficient.”

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I made the same point regardless. No difference, you are splitting hairs now.

They wouldn’t consider it as me having residence. Especially if I am not working in Germany. Also I wouldn’t need to explain it as they can tell the difference.

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Well @qwert_zuiop you seem to know better than a licensed CPA accountant… :roll_eyes:

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Yes, but where exactly do recreational purposes end and where does residency begin? The laws are a bit “fuzzy” in this area (most likely on purpose) - there is no clear path which let’s you be 100% sure that you’ll be a tax resident or not.

I am not arguing that any apartment in Germany you have will automatically make you a tax resident no matter what. I am simply stating that having an apartment in Germany can make you a tax resident (even if that’s not what one is planning or intending to…).

Yeah - that’s what the tennis guy apparently thought, too :man_shrugging:

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It can. I agreed with that. What I am saying is that in most cases it doesn’t.

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Which tennis player?

20

I think we can roughly agree on that :wink:

My point of view is more: What do you need to do in order to not become a Tax resident of Germany (accidentally…): And there, having no apartment available to you in Germany is definitely the “safe side”. If you have one, it starts getting complicated…

(This is why I didn’t keep any apartment or anything in Germany when I moved here and also didn’t take a key to my parents house with me “just in case” even though they offered. I just don’t want to risk anything…)