Germany Tax Increase

Cynic wrote:

Not only in Germany, it's quite common across the EU to be assessed in the country where you are deemed resident, on your worldwide income; these assessments will be for the whole tax year relevant to the date you arrive in the new country.  Many countries have double taxation agreements with others, these tend to lessen the impact on income tax.  However, some will also include social taxes in this assessment, these taxes are not covered by the double taxation agreements.

Hope this helps.

Cynic
Expat Team

Beppi gave a good explanation of the situation, that the amount of money one earned elsewhere during the year is needed to calculate what one owes in Germany BUT one will not actually pay tax for a time period they did not yet live in Germany - and thus get doubled taxed. Cynic writes that social taxes are not protected from double taxation - NOT true for most countries. As an American citizen, for example, I have to file tax returns to both Germany where I live and America. Income tax is avoided to be doubled tax by the Americans through foreign income exclusions or tax credits.

There is a possibility to be doubled taxed on income if I would say go back to America for part of the year and earn money there. Or if I was a very high earner and relied on tax credits to limit my American tax liability and lived in a country where the tax rates were very low. Then I would generally have to pay the difference to America for their rate minus what I pay to my country of residense. But most countries do not tax their citizens if they live abroad and are taxed elsewhere anyway.

As far as social taxes, go I get exempt from owing anything to America as I am covered under the German system. This is called a totalization agreement and Germany has this with many countries. I need to get a yearly statement from the office in Berlin that shows I am in the German social system and file this with my American tax returns.