Overview
Are you wondering under what circumstances you are exclusively liable to pay tax in Germany? In this article, we explain the criteria for unlimited tax liability in Germany, including residence, habitual abode and the influence of double taxation agreements.
Your unlimited tax liability in Germany
You have unlimited tax liability in Germany if you are resident or ordinarily resident here. This means that you have to pay tax on all your worldwide income in Germany.
Residence
You have a place of residence in Germany if you maintain a home here and intend to make this home the centre of your life.
Ordinary residence
You have habitual residence in Germany if your stay is such that it can be assumed that you will stay in Germany for at least six months - continuously or with short interruptions.
When are you exclusively liable to pay tax in Germany?
You are only liable to pay tax in Germany if:
No residence in another country: You do not have a residence in any other country that would make you liable to pay tax there.
No habitual residence in another country: You do not have a habitual residence in another country that could give rise to a tax liability there.
No double taxation: Double taxation agreements between Germany and other countries from which you receive income mean that only Germany has the right of taxation.
Special cases
Even if you do not have a residence or habitual abode in Germany, in certain cases, such as a permanent stay of more than 183 days or income from a domestic source, you may be considered to have unlimited tax liability in Germany.
Double taxation agreements
Germany has concluded double taxation agreements with many countries in order to clarify which country has the right to tax certain income. These agreements play an important role in determining whether you are exclusively liable to pay tax in Germany.
Conclusion
If you do not have a place of residence or habitual abode in another country and Germany is granted the sole right of taxation for your worldwide income under a double taxation agreement, you are only liable to pay tax in Germany. If you are unsure about your individual tax situation, it is advisable to seek professional advice.
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