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You are here: Home Finance & Business Tax Taxes: Complicated and confused

24/11/2005Taxes: Complicated and confused

Expatica's resident tax accountant Martin Brune comes to the rescue of Expatica readers bewildered by the German tax system.

RM writes:

Hello Martin

I am a freelance writer & filmmaker.  I also taught part time at a University in the UK until February 2005.  I moved to Berlin in April 2005.  At present I am still in the English tax system and have just filed my tax return (stating my mix of University payroll (taxed at source via PAYE) & freelance income) for April 2004-April 2005.  I will pay this tax in December 2005.
 
I am not earning very much money at present, what I do earn comes from writing commissions in the UK.  However, I've been offered a little bit of teaching work at Potsdam University (little is the word, only about EUR 700 worth all together).  They have asked for my tax code in order to put me on the payroll.  Can I give them my UK tax code or is now the time to enter the German tax system?
 
I gather the German system runs from December to December.  If I do enter the system can I avoid being taxed until April 2005 since I will already have paid UK tax on any earnings up to that point?
 
Ah, questions, questions.  If you have the time to answer them I would be very much obliged! Thank you in advance.

____________________

Dear RM,
 
Thanks for your email.
 
Your tax situation in Germany is kind of complicated.

The German tax year is the calendar year. The income you received before moving to Germany in April will not be taxable in Germany, as you haven't been resident in Germany from January to April.
 
Your current income needs to be divided into income from teaching and income from writing commission.

The income from teaching might be tax free in Germany according to Art. XIII double tax treaty UK/Germany. This article states that income for teaching that is received during a temporary stay in Germany that doesn't exceed 2 years is not taxable in Germany but in the UK. I would recommend asking the payroll department if you are covered by Art. XIII double tax treaty UK/Germany.

1 reaction to this article

Clueless Canuk posted: 19-03-2008 | 8:06 AM

Hello Martin,

I am a Canadian who has been offered a job in Frankfurt at 40,000 Euros. I am wondering what taxes I will have to pay on that amount? No daily allowances or apartment rental has been offered, just paying for my work permit (and potentially that of my common law spouse...)

I understand that couples are taxed in a different bracket but am unsure what defines 'couple'. I am in a defacto/common law spousal relationship and am unsure if that constitutes 'marriage' in Germany.

Attempting to do a cost/benefit analysis of whether or not this move is worthwhile in terms of cost of living in Frankfurt but am a bit clueless and would appreactiate any insight greatly!!!

Sincerely,
Clueless Canuk

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