Fri, 19 March 2010
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Reporting departure
When German residence is given up and services are no longer performed in Germany, the tax office must be informed and a tax return for the entire calendar year must be filed.
The worldwide non-German source income must be disclosed for tax rate progression purposes. A copy of the deregistration certificate (issued by the local registration office) should be attached to the tax return. A fiscal representative resident in Germany should be appointed to receive the assessment.
Non-recurring payments such as a bonus for German activities should be shifted into the year after departure because the tax burden might be lower.
If the assignment to Germany was only temporary from the beginning and has been terminated, certain expenses for moving from Germany back to the home country are deductible in Germany. A refund of such expenses by the employer may not be taxable.
There are no restrictions with respect to the export of personal belongings. VAT and/or Customs rules of the country of destination must, however, be observed.
Other matters requiring consideration
Inheritance tax
Inheritance tax is a tax on lifetime gifts and on transfers of value passing on death. Basically a person is exposed to this tax if he/she is resident in Germany. Otherwise a person who is not resident in Germany is liable to this tax only in relation to his/her assets situated in Germany.
Assets of an enterprise (including shareholding of more than 25 percent) are only subject to inheritance tax if their total value exceeds DM 500,000. The tax value of the exceeding amount is assessed with 60 percent.
Progressive tax rates of 7 percent up to 50 percent and tax-free amounts of between DM 10,000 and DM 600,000 apply, depending on the value and the degree of relationship between donor and beneficiary.
For the surviving spouse an additional tax-free allowance of DM 500,000 is granted. This allowance is reduced by the discounted value of those pension entitlements which are not subject to inheritance tax.
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