Tue, 9 February 2010
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Expatica's resident accountant Martin Brune explains the arcane mysteries of double tax treaties to three readers who each have ties to two countries.
Sorry for disturbing your time with this question. I am from the UK, employed by a company here in Germany paying tax here in Germany, and would like to know what can be reclaimed in tax.
I started work here in April 2005. I have a mortgaged house back in UK, and I travel quite a bit back to the UK (once or twice a month). I also rent an apartment here in Frankfurt. I know that self employed people can claim back travel and expenses, but i don't know if i can make any tax rebate claim for travel and or housing etc.
Thanks.
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Dear Reader,
Thank you for your question.
The German tax system allows taxpayers to deduct expenses if the expenses relate to income that is taxable in Germany.
Therefore, in a first instance it needs to be checked if your income is taxable in Germany.
The income from employment is taxable in Germany as you are paid from a German company. Therefore, you can deduct any expenses that are related to this income, i.e. travel expenses that occur when you are on a business trip will be deductible if they are not refunded by the employer. Housing is deductible if a double household exists (see previous columns for the definition of a double household).
However, the deductions for certain expenses is limited. If you use your own car for a business trip, you can deduct a lump sum of EUR 0.30 per kilometre driven. This lump sum covers all costs for petrol, insurance etc. For meals on a business trip you can deduct per diems lump sums up to certain amounts, depending on the duration and location of your business trip.
The rental income that you receive in the UK is taxable in the UK according to the double tax treaty Germany/UK. However, Germany will use this income as so called progression income to determine the tax rate.
Expenses that relate to this rental income (i.e. travel expenses, phone expenses) will be deductible from the progression income. This will lower your German tax burden slightly.
Hope this helps.
Best regards,
Martin
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Dear Martin,
I have 2 questions about double-household.
I've just come to Hamburg from Italy for work.
I have a permanent work-position here for a German company.
I'm not an house-owner in Italy but I only have it for rental: I'm paying a certain amount monthly.
I want to do it even in the future because I'm still considering Italy as my center of life: my girlfriend is living in Italy (but not in my apartment!), so I'm planning to come back to Italy once every 2 months.
I know it's usuallly enough to be "Double House Holder".
The point is that the real owner of the apartment is my mother!
I've heard about this is not accepted by German law.
Is it correct?
Moreover I would glad if you can tell me what documents I have to show to prove my double-household in case of check by German govenment: I know the italian rental-contract is not enough. Maybe the money transfer from my german bank to my mother's italian bank account monthly?
Thank you,
Best regards.
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