Relocation of Sports Pro to Tax Oasis

As well known, when a person flees to a tax oasis, Germany still wants to have its share of taxes. So, when employed abroad (from Germany now) and having also business income due to interaction with German companies, are you still subject to German taxation? The BFH passed a judgment on December 19, 2007 (re I R 19/06; published on March 5, 2008) to give an answer to this question.

Alpha, a professional sportsman, relocated his domicile from Germany to a country with no taxation. During the years in dispute, he had income from employment and trade (Gewerbebetrieb). His business was “lending” his name and face, picture ads, press conferences, autographing sessions, etc. to companies in Germany. His Finanzamt considered this as taxable in Germany.

The Federal Tax Court determined Alpha is not anymore subject with his total income to German taxation – only partially (beschränkte Steuerpflicht, §§1 IV, 49 EStG). Since his business is in his apartment in the tax oasis, he has no residence in Germany anymore, he is generally not to pay any taxes anymore in Germany. However, when it comes to business income achieved in Germany, this will exceptionally be taxed in Germany (§49 I no. 3 EStG). Passive business income from granting the use of personality rights (right on name or picture of the athlete) in Germany is business domestically acquired and therefore subject to taxation. “Activ” income like participating in advertisement clips, press conferences, etc. are not taxed in Germany because this income has been achieved abroad to the foreign business – the apartment in the tax oasis. BFH has so rejected a differing practice of the tax offices.

Published on the old CMS: 2008/6/4
Read on the old CMS till November 2008: 2,692 reads