Germany applies a tax residency rule based on the number of days an individual spends in the country within a given period. This rule is critical for determining tax obligations for foreigners and expatriates.
How the 183-Day Rule Works
The 183-day rule states that an individual may be considered a German tax resident if they spend more than 183 days in Germany within a rolling 12-month period or a specific tax year, depending on applicable tax treaties.
Key Considerations
- Rolling 12-Month Period: Unlike some countries that use a calendar-year basis, Germany often applies the 183 day presence test on a rolling basis, counting days spent in Germany any consecutive 12-month span.
- Permanent Residency vs. Temporary Stay: If an individual maintains a permanent home or habitual residence in Germany, they may be considered a tax resident regardless of the 183-day threshold.
- Double Taxation Treaties: Germany has agreements with various countries to prevent double taxation. The specific application of the 183-day rule may depend on these treaties.
Tax Implications
Being considered a tax resident in Germany means an individual is subject to taxation on their worldwide income. Non-residents, however, are generally taxed only on German-sourced income.
Conclusion
Understanding Germany’s 183-day tax rule is crucial for expatriates, business travelers, and remote workers. You are encouraged to consult with a tax professional tp help determine specific tax obligations and potential exemptions.
Download the Domicile365 App to track your days in Germany over rolling 183 day periiods to self-assess your likely tax residency status.
