Natural persons with their domicile or habitual abode in Germany (§ 8 and § 9 German General Fiscal Code ("Abgabenordnung") respectively) are subject to unlimited income tax liability in Germany pursuant to § 1 para. 1 sentence 1 of the German Income Tax Act ("Einkommensteuergesetz") with regards all income earned in Germany and abroad.
Pursuant to §§ 1 para. 4, § 49 para. 1 no. 4a of the Income Tax Act, foreign employees working in Germany may even be subject to limited income tax liability if they do not have a domicile or habitual abode in Germany.
Unilateral tax relief regulations exist (§§ 34c, 34d Income Tax Act) to avoid overlaps in tax claims made by different countries of an individual taxable person. They are based on the principle of the ability to pay taxes, whereby no distinction may be made with regards to equality of taxation or whether income has soley been earned and therefore is solely liable for tax in Germany or additionally involves foreign remuneration.
Additionally, Germany has concluded (bilateral) double taxation agreements with many countries to regulate which country waives taxes in accordance with national legislation. Double taxation agreements do not substantiate any tax liability; rather they merely determine or limit the right to taxation.
If your research stay in Germany is taking place on the basis of a fellowship, you may, under certain circumstances, be exempt from taxation under German income tax law. It is certainly worth consulting the organisation which has awarded the fellowship on this point. Furthermore, you should find out whether the fellowship paid in Germany is subject to taxation in your own country.
Details on tax exemption on fellowships in Germany.
If you spend a research stay in Germany with an employment contract, three tax scenarios are conceivable:
- Pursuant to § 1 para. 4 of the Income Tax Act, if you do not have your domicile or habitual abode in Germany, you are subject to limited income tax liability if you earn income in Germany from permanent or temporary dependent employment in the sense of § 49 of the Income Tax Act. While personal tax concessions mostly do not exist, it is possible that the German right of taxation might be limited due to a double taxation agreement with your home country.
- Natural persons without a domicile or habitual abode in Germany in permanent dependent employment in Germany are also able to select the option of § 1 para. 3 of the Income Tax Act and, upon application, request for their income earned in Germany to be deemed (fictively) liable to income tax in Germany in the sense of § 49 of the Income Tax Act while simultaneously maintaining unlimited income tax liability abroad.
The condition for an application is either that 90% of all income is subject to German income tax, or that the income subject to foreign taxation does not exceed the basic exemption allowance ("Grundfreibetrag"), which is currently 10,347 euro (as of February 2022, § 32a para. 1 sentence 2 No. 1 Income Tax Act), and confirmation is provided by the foreign tax authorities of the total income taxable abroad.
- If you choose to have your domicile or habitual abode in Germany while in dependent employment and members of your dependent family remain in your home country, you are subject to unlimited income tax liability both abroad and in Germany for the entire year. The taxation rights in this scenario are generally regulated in double taxation agreements. In case of employment in Germany based on a German employment contract, a domicile or habitual abode in the sense of the tax legislation (§§ 8, 9 General Fiscal Code) exists. An employee is also able to have several residences.
Tax you are liable to pay is deducted from your salary and transferred to the tax authorities by your employer as so-called wage tax ("Lohnsteuer").
At the end of each calendar year, you may file an income tax return ("Einkommenssteuererklärung) with the tax office in your place of residence. This may entitle you to a partial tax refund. Your local tax office ("Finanzamt") can provide you with more information and applications can be filed online on the tax offices' online Elster system. Often, it is worth paying a tax advisor or an income tax assistance organisation (Lohnsteuerhilfeverein) to help you complete your tax return.
- Double taxation agreements
Texts of the double taxation agreements concluded by the Federal Republic of Germany as well as other state-related publications
Federal Ministry of Finance
- Local tax offices
Lists of local tax offices (in German)
Federal Finance Office
Elster (Apronym for electronic tax declaration) is a project of the German tax administrations of all countries and the federal government for the processing of tax returns and tax returns via the Internet (in German)
- Database of tax accountants
Search for tax accountants in Germany, Europe and worldwide amongst other things by area of expertise (for instance "income tax") and by country on whose tax law the adviser is specialised
German Association of Tax Advisers' Database
- Income Tax Assistance Organisations (Lohnsteuerhilfevereine)
The Income Tax Assistance Organisations Network (Bund der Lohnsteuerhilfevereine e.V.) has information about income tax assistance organisations near you.
- Your Europe
Information on your rights and opportunities in the EU and its Internal Market plus advice on how to exercise these rights in practice. Useful information on living, working and studying in another EU country, including taxation