If your research stay abroad takes place in the framework of a fellowship you are, under certain circumstances, exempt from taxation under German income tax law (cf. exemption of fellows from tax in Germany, § 3 no. 44 Income Tax Act). Your tax status as a fellow will be determined by the authorities in your host country. We recommend that you discuss taxation matters with the organisation which awarded the fellowship.
The central norm of the German income tax law is § 1 para. 1 sentence 1 of the Income Tax Act ("Einkommensteuergesetz").
Pursuant to this norm, all persons with their domicile or habitual abode in Germany (§ 8 and § 9 of the General Fiscal Code ("Abgabenordnung") respectively) are subject to unlimited income tax liability. If the tax laws of the country abroad also relate to the place of residence and you retain a residence there during your research activities, a case of dual unlimited income tax liability arises. This conflict is solved through international law agreements whereby only the tax law of one of the two countries applies. In Germany, double taxation can be avoided and the income earned exempt from tax if proof is provided of the payment of tax abroad. Alternatively, the income tax paid for the research activity abroad is taken into account upon application in calculation of the German income tax owed.
German nationals in the employment of a public domestic legal entity or receiving a wage from a public domestic fund are subject to extended unlimited tax liability pursuant to § 1 para. 2 of the German Income Tax Act.
Giving up your German domicile does not automatically free you from the liability to pay income tax in Germany. Limited tax liability may continue to exist for income earned in Germany in the sense of § 49 of the Income Tax Act.
Upon moving to a country with a lower effective tax rate, all income not earned abroad pursuant to § 2 of the German Foreign Tax Act ("Außensteuergesetz") may be subject to so-called extended limited income tax liability.
In exceptional cases your income will be taxed in Germany if the stay abroad does not last more than 183 days during a period of 12 months, your employer is not resident in the country in which the work is carried out and there is a double taxation agreement that assigns the right of taxation to the home country. There are agreements with some countries that allow higher education teachers and researchers who spend a maximum of two years doing research at a public research institution abroad to pay their taxes in their own country. Details can be found in the double taxation agreements which exist in relation to the Member States of the EU and certain other countries.
