Salaries, wages and other remuneration received by a non-self-employed person resident in one of the countries in the double taxation agreement can only be taxed in that country, unless the work is carried out in the other country. If that is the case, then the remuneration can be taxed in that country. So, when the work or service from which the remuneration arises is carried out in Germany, then Germany is the place of work and therefore as the source country also has the taxation rights.
This principle that the country of the place of work can levy tax is however nullified if the 183 day rule is used.
Remuneration received by a non-self-employed person resident in one country for work carried out in the other country can only be taxed in the first country
- the recipient stays no longer than 183 days in a calendar year in the other country and
- the remuneration is paid by or for an employer who is not resident in the other country and
- the remuneration is not borne by an establishment or branch that the employer has in the other country.
The criterion for measuring the 183 days is the total number of days actually spent in the country not the number of days worked.
HOW WE CAN HELP YOU
If the Double Taxation Treatment is applicable, exemptions could be applied for before the employee starts work in Germany or could be claimed back later in accordance with German legal regulations and the fiscal code.
Independent from the length of time the employee has been working in Germany, the question of being compliant with the German regulations has to be considered. The payment of tax is a legal obligation. The Double Taxation Treatment could be applicable or a tax exemption application could be made.
Our private tax team has been advising expats working in Germany throughout the past 30 years and we will make you feel at home while doing business in Germany.
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