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There are various situations where an expatriate who relocates to Germany would benefit from a “tax cover” to avoid undesirable tax consequences. One way to avoid unwanted tax implications is the transfer of property which generates respective income to a German or a foreign company. However, this transfer often results in tax consequences at a later stage which may be considered not to be beneficial and so it must only be done after proper research. Another tax planning tool might be the transfer of respective property into a pension plan.

Foreign business entities sometimes have to pay German Value Added Tax (VAT) even though they are not tax resident in Germany. This may be VAT on deliveries and services received in Germany which are shown on invoices of German suppliers or service providers or import-VAT. Because the regular VAT-rate of 19% is quite severe it is of importance to know how a foreign business entity can reclaim German VAT that has been paid.

Living and working in another country requires careful tax planning as there are always many tax issues to be considered. In addition, social security and other legal issues such as immigration law must be observed. This applies for all US citizens who relocate to Germany and it is important to note that there are special issues to be observed. Different tax and social security systems in Germany and the USA may cause problems in addition to those contained in special provisions in the Double Taxation Convention between Germany and the USA (DTC USA).

From 1st March 2020 skilled workers and professional specialists are able to move to Germany in order to work in Germany. This is due to the Fachkräfteeinwanderungsgesetz (Specialist Immigration Code), which allows skilled personal from non-EU or non-EEA-countries to live and work in Germany. The previous restrictions in controlling the number of  specialists and skilled workers into Germany have been reduced  significantly.

Die Abgabefrist für jährlich abzugebende Steuererklärungen wurde vom 31. Mai des Folgejahres auf den 31. Juli des Folgejahres verlängert.

The deadline for tax declarations which have to be submitted on a yearly basis has been extended from 31 May to 31 July of the following year.

Traditionally Germany has had a so called synthetic tax system. That means that the total income from each and every source is amalgamated and the sum multiplied by the individual tax rate of the taxpayer. This method also means that losses from certain sources (such as trade and business or renting out real estate and property) can be credited against other positive income. Germany abolished this system with regard to income from capital investments and now this kind of income is not part of this amalgamation but is taxed at a special tax rate.

Starting a business in Germany requires various registration procedures. The same applies for fundamental changes in the entity’s legal structure or the liquidation of the entity or the termination of business activities.