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Germany is surrounded on all sides by many neighboring countries. It is therefore only natural to have citizens of the neighboring countries working in Germany, as well as numerous German citizens working in the neighboring countries.
As a result, there are a few peculiarities which must be taken into account when drawing up the income tax declaration for the employee concerned, so that they can benefit from the maximum tax advantages as frontier workers.
Distinguishing between frontier workers and cross-border commuters.
When it comes to frontier workers, those persons who are resident in the respective border zones are considered to be tax residents. This usually includes between 20 and 30 kilometers beyond the border. The exact distances are regulated by the respective double taxation agreements between Germany and the corresponding neighboring country. In addition, there must be permanent and regular employment in the other country. Those who meet these requirements are subject to limited tax liability in Germany. If, however, you earn more than 90 percent of your income in Germany and have a tax liability abroad amounting to the German basic tax allowance, then you can apply for an unlimited tax liability with your employer's tax office. As a frontier worker, this will allow you to fully take advantage of the children’s' allowance, to deduct professional expenses and to benefit from other tax incentives.
Even those who do not live in the border zone, but who work abroad, are regarded as border commuters. For these persons, the right to taxation generally lies with the country in which the employee is actually active. So if you live 50 kilometers from the border and work in Germany, you will be subject to German tax laws with all its pecks and disadvantages.
Where do the tax declarations have to be made?
Generally, as a frontier worker or cross-border commuter, you have to file your income tax return with the competent financial office of your employer. This is referred to as the duty to pay taxes at the tax office responsible for the business premises.
Since the completion and submission of the tax declaration can lead to additional difficulties and pitfalls precisely for cross-border workers, it is advisable to seek professional assistance when compiling them. To do this, please contact an income tax assistance union or a tax consultant.