Foreign Resident Tax?? Solidarity Charge!?!

Hi there, I know my profile says I am an expat in Germany but I do not think thats accurate, I just put that to be able to post here. I am an American, who resides in Canada but is working temporarily in Germany (approximately 4 months) on a contract with a company as a freelancer. It is common I work short-term contracts in different countries and most of the time I am self-employed and not an employee.


Basically I am posting to this forum because my employer informed me that when I make more than 250€ a day they are required to take out 15% taxes for the foreign resident tax and 5.5% for solidarity charge. I am trying to see if theres a way to get out of this as it makes my taxes at the end of the year a crazy mess and in other countries there are oftentimes nonresident declarations that can help you avoid withholding tax. I am writing here as I am having a hell of a time finding direct information for my case online.

also I did find out that apparently solidarity charge has been discontinued for those earning less than around 70000€ a year, which is applies to me. Am I being scammed here? Or is there another category that I unfortunately fall into in my case?


Does anyone have any insight into this?

Thank you.

@Dmaarie You can easily enter your actual nationality, current residence country and also past residences in your profile.

International work IS a tax mess. Nothing you do will change that.

As employee in Germany, you should not only contribute German income tax (of course - why should you be different than anyone else working here), but also health and unemployment insurance, social security and pension fund. Count on about half of your income being taken at source.

Whether you are double-taxed in your home country depends on what a bilateral ax treaty with Gemany says (IF one exists - the USA seem reluctant to have such treaties).

Altogether, you will need a tax consultant in Germany - and probably one in your home country.

@beppi As it says in my post, I am not an employee here, I am a self-employed contractor working here over 4 months. why would i contribute to a system I reap no benefits from? I am not a resident, I am a temporary worker. If i need to, I will gladly contribute to Germanys tax system and have these taxes withheld, but I am not going to have an employer withhold taxes if it doesnt need to be. Do you know anything about the solidarity charge?


Also I did enter my nationality. As I said, American, residing in Canada but working temporarily in Germany.

@Dmaarie Are you leaving Germany every day after work, and have no place to stay in the country?

If not, you are resident (by German law). And: In that case you do reap the benefits, of our safe cities, stable economy, good roads and public transport, etc. etc. etc. It is only fair that you contribute, too, like everyone else who works here.


I could not have guessed, from your post, that you are self-employed - you even used the word "employer"!

If you are self-employed, things do get a bit cheaper (although the percentages you mention seem still too low, e.g. you did not mention health insuance - which is compulsory for everyone and self-employed pay for it double as much as employees, because there is no employer paying the other half).

Without properly registering your business, what you are doing might even be illegal.

I suggest you immediately consult a business service provider, accountant and/or lawyer to set things up properly!


And, last not least: Sorry for mistaking you for a USA citizen - I forgot that Canada is, geographically, also in America, and the use of that word for just one country is wrong. (You might want to corect your profile to reflect that you are Canadian.)

But other than that my answer, and mention of potential tax treaties (which you should check!) ist still correct.

@Dmaarie


To the best of my knowledge, there are no tax experts in the group, although members like @beppi have a wealth of knowledge and expertise in Germany we can only give advice in certain areas. Tax is a very complicated thing, especially when dealing with cross-border employment.


So you are an American that lives in Canada and works in Germany as a self-employed contractor?


Then you need to take @beppi's advice and seek professional advice from a tax consultant and an immigration lawyer because you will also need a work visa unless you hold an EU passport.

Beppi is correct that either one is a resident - or they are working illegally. The poster seems to conflate temporary or limited residency with being a non-resident. A non-resident is a tourist. But being a resident is a broad catagory with many statuses. One can be on a family reunion visa, study visa, work visa, research visa etc. And a work visa can be open ended or specifically limited in time. And yes, there will be some significant differences between being a long-term resident and a temporary one.


Germany has some very specific rules for self-employment. Exactly so that either employees or employers they don't try to get around social security and tax contributions, if one is doing contractual work in Germany for a single entity then they are in fact a temporary employee and for tax and legal purposes not self-employed. And yes, German law is applied in Germany.


On the other hand American tax extends to all of its citizens world-wide. US expats still have to file US tax returns but if you are really residing long term in Canada you should know this.

@beppi No I am american, but i reside officially in Canada. I know the considerations for primary residence is different in Germany but many other self-employed individuals who complete contracts in germany do not have to file taxes at the end of the year as long as you dont spend over 6 months in Germany. Honestly this is not the right forum to ask, the industry i work in is very specialized and very specific and its not common. My mistake, will move on to the tax professionals.

@TominStuttgart I do already know US/Canada tax law, i do have to file every year. and yes I am temporarily contracted with a specific entity in Germany and yes I have a work visa and am not working illegally. I apologize, this forum is not where I should have gone, I work within a very specific industry and it is foolish to think that my case could be even remotely similar to anyone elses here.

@SimCityAT I already have a work visa, not sure why it is assumed I am working illegally here. I guess I should mention that I have one in my post so people do not automatically assume I do not follow immigration laws.

@SimCityAT I already have a work visa, not sure why it is assumed I am working illegally here. I guess I should mention that I have one in my post so people do not automatically assume I do not follow immigration laws.
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Well if you had explained in your posts a bit more precisely then you would have saved a lot of time.


As we have said, we are no tax experts and are only here to give advice.


I wish you well in finding the results you want. 

The OP has deleted his account (that's why it is now shown as "Guest8842") and will no longer read replies.

But the answers he got above are factually correct - and I think he is delusional in thinking that these don't apply to him, just because of his "very special industry". The law makes no difference here!

The OP has deleted his account (that's why it is now shown as "Guest8842") and will no longer read replies.
But the answers he got above are factually correct - and I think he is delusional in thinking that these don't apply to him, just because of his "very special industry". The law makes no difference here!
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It's a pity I never got to ask what his Special Industry was......... Tax evasion?

@SimCityAT I already have a work visa, not sure why it is assumed I am working illegally here. I guess I should mention that I have one in my post so people do not automatically assume I do not follow immigration laws.
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I never made that assumption; just that  a non-resident is a tourist and has no right to work. One with a work visa is a resident although a temporary one. One cannot logically claim they should not be taxed as a non-resident in such a situation. Take your pick of status but on a work visa and being a non-tax paying non-resident is not an option.

@TominStuttgart There is such a possibility: A cross border commuter can be working here without being resident. And indeed, I heard there are special taxation rules for such cases!

But since the OP left when we did not tell him what he wanted to hear, we should stop the discussion here!