Residing abroad, income from Germany. What you have to report, what remains deductible— and when applying for full tax liability puts you in a better position.
German tax law recognizes two categories. Which one applies to you depends solely on your residence.
If you have limited tax liability, the German tax office is only interested in income earned in Germany. Anything you earn outside of Germany is not taken into account. The limitation: Many tax benefits—the basic exemption, spousal income splitting, and child allowances—do not apply by default . This can be changed upon request.
Only income listed in § 49 of the German Income Tax Act (EStG) and clearly related to Germany is taxed. If a type of income is not on the list, it remains tax-free in Germany.
If there is a German connection—place of work, real estate, paying agent, permanent establishment—the income is taxed in Germany. If this connection is missing or the income is not listed in § 49 EStG, it remains tax-free here.
Anyone who lives near the border and works in a neighboring country pays taxes on their wages in their country of residence. The requirements and tax deductions vary by country. (Applies only to wages—not to self-employment, pensions, or other income.)
Cross-Border Worker Rules at a Glance
up to 20 km ¹
usually on workdays
Outside the zone / no daily return
country of residence
No
Overview of the Cross-Border Worker Rule
30 km on both sides
Commuting is no longer mandatory
45 days outside the zone or 20%
country of residence ²
No
Overview of the Cross-Border Worker Rule
No distance limit
Regularly
60 days of non-return
country of residence
up to 4.5% ³
¹ 30 km for employees residing in the French border departments.
² In the public sector, the country that pays the salary is responsible for taxation.
³ Swiss withholding tax, creditable in the country of residence—with a certificate of residence.
In the case of France and Austria, the country of employment does not withhold tax— the salary is taxed solely in the country of residence (in the case of France, there is only a 1.5% adjustment payment between the countries, which does not affect you). Switzerland alone withholds up to 4.5% in withholding tax. If you live in Germany, this amount is credited against your Income tax; if you live in Switzerland, your gross wages are reduced by one-fifth for tax calculation purposes.
taxtastic guides you step by step through your income tax return, the credit for withholding tax, and direct submission via ELSTER.
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