You are planning an investment abroad or wish to establish a branch there and want to clarify and possibly optimize the tax implications beforehand.
International Tax Law
Understanding Risks, Seizing Opportunities
Many companies and individuals have – or are planning – international business interests. From a tax perspective, cross-border activities are often highly complex. This applies to domestic taxpayers with foreign income (outbound) as well as foreign taxpayers with domestic income (inbound).
Germany has concluded 96 double taxation agreements (DTAs) for income taxes and six DTAs for inheritance and gift taxes (as of January 1, 2024), which determine which country has the right to tax specific income. The goal is to avoid double taxation.
Our team of certified international tax advisors is available to assist you in English if needed.
What brings you to us?
The following selection of possible questions illustrates just a small portion of what we can do for you in international tax law:
You have dual residency in Germany and another country and want to know if you need to file a tax return in Germany and which income is subject to German taxation.
As a foreign company, you wish to acquire a German company or establish a German subsidiary.You plan to assign employees abroad.
Our Services at a Glance
- German tax returns for individuals with dual residency / limited tax liability with German and foreign income
- Payroll accounting for foreign companies with employees in Germany
- Tax advice and support for investments, company formations, or acquisitions in Germany by foreign taxpayers
- Tax advice for investments abroad
- Employee assignments
- Applications for VAT refunds in EU and non-EU countries
Our Clients Ask Us...
I recently moved to Germany but still have a residence abroad. Am I subject to taxation here? Do I need to file a tax return?
If you have a residence or habitual abode in Germany, you are subject to unlimited income tax liability. This means you must declare and pay taxes on your worldwide income in Germany. In most cases, a German income tax return must be filed.
If you also have a residence abroad, your taxation is determined by the double taxation agreement (DTA) between Germany and the respective country. Germany currently has DTAs with over 90 countries. The decisive factor is usually where a person has the center of their vital interests, such as family, job, and leisure activities.
I am an employee of a foreign company and work in Germany. What do I / my employer need to consider? Is German wage tax to be withheld?
If the employer has a permanent establishment or representative in Germany:
- The employer is obligated to prepare a payroll for the employee.
- As part of this payroll, the employer must calculate and remit the wage tax to the tax office.
- Additionally, the employer must calculate and remit social security contributions to the relevant institutions.
If the employer has neither a permanent establishment nor a representative in Germany:
- The employer is still obligated to prepare a payroll for the employee.
- In this case, the employer must calculate and remit only the social security contributions to the relevant institutions.
- The employee is responsible for declaring and paying income tax on their salary.
- The employer is required to pay an employer’s contribution to social security in Germany, amounting to approximately 20% of the monthly salary.
I am a foreign taxpayer / a foreign company and wish to invest in Germany / establish a company. What do I need to do? Which legal form is optimal?
This depends on the individual situation and the type of investment. We are happy to advise you; beforehand, you should consider the following questions:
- What type of investment is planned: new establishment, establishment of a branch or subsidiary of a foreign company, private investment?
- Is it important to limit liability, or are the risks so minimal that personal liability is not a concern?
- How much equity capital will be invested?
- Are individuals financially dependent on regular income from the company? If so, to what extent?
- Should initial losses be tax-deductible for the involved individuals?
- Is the company’s creditworthiness a significant factor?
- Who are the business partners/customers? B2B or B2C?
Additionally, you should allow sufficient time if you need to open a business bank account with a German bank. This often requires numerous documents and, in some cases, multiple in-person appointments.
I plan to move abroad. What tax consequences can this have?
If you continue to have a residence in Germany after moving abroad, you remain subject to unlimited tax liability in Germany. Your taxation is then determined by the double taxation agreement (DTA) between Germany and the respective country.
Germany currently has DTAs with over 90 countries. The decisive factor is usually where a person has the center of their vital interests, such as family, job, and leisure activities.
It is essential to seek advice from a tax advisor in the respective country before moving to be informed about all tax obligations and applicable taxes on-site.
If you hold significant shares (i.e., at least 1%) in corporations, you should seek tax advice: at the time of moving, “exit taxation” (§ 6 AStG) may apply. This means that the move is treated as a fictitious sale of shares, and the fictitious gain (market value minus acquisition costs) is subject to taxation.
