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Employees who work abroad often wonder who they should send their tax returns to at the end of the year, or in which country they are actually taxable. There may well be different answers to that.
Under certain circumstances, the state of activity has tax sovereignty, but in most cases it is the state of residence. Here is a brief explanation:
The state of activity is the country in which the worker carries out his activity, i.e. a foreign (neighboring) state in this case.
In this case, the state of residence is Germany, i.e. the country in which the worker concerned is resident.
Generally, in such a case, the taxes on a working income are due to the state of activity, i.e. the tax declaration must also be addressed to the financial authority of that country in compliance with its tax laws.
However, the Federal Republic of Germany has concluded the so-called double taxation agreements with many neighboring States. The 183-day regulation only applies to the countries with which such an agreement exists. This simply means that you as an employee would have to pay your taxes in Germany even if you work abroad, provided you do not stay for more than 183 days per year in the respective country. By the way, these 183 days also include sick days that you spent there. In addition, two other conditions must be fulfilled for the 183-day regulation to be applied:
The worker has no permanent business establishment in the state of activity in which he is being paid
The employer who pays the remuneration is not resident in the state of activity.
If all three prerequisites are met, the tax laws of the country of residence applies, i.e. Germany in our case. You must therefore submit your tax return to the appropriate tax office for your state of residence.
The duration of the stay which is calculated for the application of the 183-day regulation, must also be determined once again for each tax year. Several shorter stays are usually added up and it always depends on the physical presence in the state of activity. So even sick days are included in the calculation. If you are unsure of who to send your tax return to, or whether the 183-day regulation is applicable in your case, please contact our Cooperation partner, YourXpert. You will be provided with professional assistance.