Germany's tax bureaucracy can be tough to navigate for Germans and foreigners alike, and situations such as frequent travel and remote work can all cause further confusion.
How do you know if you have to pay tax in Germany?
A general rule is that if you have a main residence in Germany or stay there for more than six months (183 days) a year, you are fully liable to pay tax in Germany. It does not matter where you earned your income - in Germany or abroad - you have to declare the money you've made and pay any tax you owe to the Finanzamt (tax office).
The German government's Finance Ministry sums it up by saying: "Every person who lives in Germany or has their habitual place of residence here must pay income tax."
And the state should have this information: people living in Germany for more than three months have to complete an Anmeldung or registration at their local citizens' office.
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Tax specialists point out that it's not just about the 'six month rule' in Germany.
"Even if a house or any other type of domicile is not maintained by the taxpayer, the taxpayer is subject to German tax if his habitual stay is in Germany, says specialist Winheller.
"While many countries ask for a stay of more than six months to be considered a tax resident, the German Fiscal Code does not have this fixed requirement. Even if a stay in Germany is less than six months it can be a habitual stay in accordance with Germany's national law."
Proof of where you're liable for tax
Almost everyone has to declare and pay tax in Germany, from employees to self-employed people, jobseekers and pensioners.
If there is anything up in the air about whether you're liable for tax in Germany, tax authorities may look at a variety of factors to determine how much time you spend in the country each year.
Anytime you enter or exit Germany directly to or from a non-Schengen Area country, your passport will be stamped, providing a record of how long you were in the country. But given the EU’s open-border policy, tax authorities’ investigations can go beyond passport records.
In addition to Anmeldung records, tax authorities may also check for things like vehicle records, club memberships or purchases for flights and train tickets.
Alternatively, if you’ve been accused of owing tax in Germany even though you spend most of the year in a different country, these are the types of documents you can provide to show that you were actually living abroad.
There are other points to consider. For instance, if you transfer to work in Germany within the calendar year, you need to take into account the income earned before becoming a German resident when figuring out your taxable German income.
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Germany has concluded double taxation agreements with many countries to make sure that people who earn income both in Germany and abroad do not have to pay tax twice for the same income. Check out the German government's dropdown menu here to see which countries are on the list.
German residents earning money in other EU countries should still check this list, as certain tax provisions may be unique to the two countries in question.
If required, you can get a tax residency certificate from your home country or Germany stating where you paid taxes.
Paying tax on a holiday home
If you own a holiday home or flat in Germany but don't usually live there, you will not become a tax resident of Germany simply by virtue of owning property.
However, you'll still need to pay any relevant property taxes and other fees on the home, as well as declaring rental income in Germany.
If you have any doubts or queries on any tax matters, you should get in touch with a tax advisor or accountant to find out where you owe tax and for tax breaks you may not be aware of.
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