Subject to Taxation

As a general rule, you are taxed where you have your domicile. But the following questions will show how tricky this subject actually is. However, taxation depends on the actual mixture of your citizenship and the kind of income to be taxed. Whereas some countries (like the United States) have the principle of nationality (meaning every US citizen is obliged to at least submit a tax return – wherever they may live), Germany has the principle of residency, which means that if you live here, then you have to submit a return and maybe pay taxes. N.B. Do not work in Germany unless you have a residence permit allowing you to work here. The tax office does not care whatsoever if your income was illegal or not. Such income will be taxed – following the normal rules!



My company needs me to work in Germany periodically for operating purposes. My boss rented me an apartment as a reward for good work – even though I only come here every few months for a week at a time. Am I already subject to German tax liability?

You are, because you are a resident here. You have a residence "Wohnsitz” if you not only temporarily have an apartment here (rooms suitable for dwelling, §8 AO). Registration at the police is not required to qualify for having a German re­sidence (BFH BStBl. 1986, 135). Looks like your reward is more a curse than a blessing. It would be better for your boss to provide you with a luxurious room in a hotel. If your boss rents you an apartment, you will be clear of taxation in Germany.

Being a “snowbird”, I remain the summer half of the year in Germany and stay on the southern hemisphere during the wintertime. I just hate cold weather and snow gives me the creeps – except on postcards. Where will I be taxed?

There is nothing special about you. If you have an apartment in Germany, you will be subject to taxation.

For tax purposes, is there any difference whether I’m married or single?

Many! To name a few of the most important: tax-free exemptions are doubled, you have different tax clas­ses to choose from, and you can file joint or se­pa­rate returns. Your attorney or tax advisor can take care of these questions while computing your taxes. Really you are – as a rule -- not subject to taxation. However, it might be a good idea to subordinate yourself under German taxation. This will be possible if at least 90% of your income is “German” and any foreign income is not more than € 6,136.

I have been living with my better half for ages in a "common law marriage". Germans call this living together without being formally married as "wilde Ehe" or "Ehe ohne Trauschein". Does that also count as married?

No, informal marriages do not count at all!


I am getting a stipend for my studies here. Do I have to pay taxes on that?

No. You are only subject to taxation if you receive income from such sources as employ­ment, self-employment, trade or business, investments, rent (e.g. apartments, office spaces, cars). These are the most common cases that lead to taxation. A stipend is considered a grant from any private or public foundation.
I am studying German Literature in Heidelberg. I live in a dorm. I have to do some sideline work to finance some expenses. Am I subject to taxation in Germany?

A room in a dormitory qualifies as an apartment under the law. German students who rent an apart­ment in their university towns normally have their official residences at home, due to family ties, even if they rent an apartment in their university towns. Foreign students may be treated differently. So expect to pay taxes if your income exceeds the tax-free limit.

I have worked here for only six months. Why do I have to wait till the end of the year to collect my tax refund?

Taxation starts after surpassing a certain annual threshold. As of the fiscal year 2005, this is set at € 7,664 for individuals and for married couples € 14,304 (§32a I EStG). However, this threshold rises every year because Germany’s Fed­eral Constitution Court (Bundesverfassungsgericht) ruled that families are to have precedence in tax relief. If any income tax was withheld from your salary, it will be refunded at the end of the year after you file your income tax return (Ein­kom­menssteuererklärung).

As a pensioner, do I have to pay taxes? And do I have to submit tax returns anyhow?

Generally, yes you have to pay taxes according to the normal rules. Tax law grants you, however, ex officio special reliefs. The same goes for tax returns, unless your Finanzamt exempts you. Supposing, you only have your old-age pension as an income, you might not even have to submit returns anymore. But your tax office will decide that. You will receive a brief on exemption ex officio.

Additional information