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Germany - Special considerations for short-term assignments

Special considerations for short-term assignments

Taxation of international executives

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Residency rules

Payroll considerations

Taxable income

Additional considerations

For the purposes of this publication, a short-term assignment is defined as an assignment that lasts for less than1 year.

Residency rules

Are there special residency considerations for short-term assignments?

Are there special residency considerations for short-term assignments?

Please see explanations regarding resident/non-residents.

Payroll considerations

Are there special payroll considerations for short-term assignments?

Are there special payroll considerations for short-term assignments?

For non-residents, the tax obligations are generally fulfilled with the wage tax withholding procedure. There are various tax classes for withholding purposes and the more favorable tax class should be applied for by the employer on time. Since often the withholding tax submitted will become final (not followed by an individual tax assessment), the employer has to make sure that payroll withholdings are correct.

Taxable income

What income will be taxed during short-term assignments?

What income will be taxed during short-term assignments?

If the individual becomes a resident while on short-term assignment, they will be liable to tax on their worldwide received income. Non-residents are subject to tax on certain categories of income from German sources.

Additional considerations

Are there any additional considerations that should be considered before initiating a short-term assignment in Germany?

No. However, special attention should be paid to the upfront structuring with respect to residence/non-residence position where feasible.

Disclaimer

All information contained in this publication is summarized by KPMG AG Wirtschaftsprüfungsgesellschaft, the German member firm affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity, based on the German Income Tax Law 2019 (§§ 1, 2, 3, 8, 9, 9a, 10, 10b, 10c, 17, 19, 20, 23, 32, 32a, 32b, 32d, 33a, 37, 38, 39b, 49, 50 EStG); Abgabenordenung (§§ 8, 9, 149, 152, 233a, 238, 240 AO); Bundesumzugskostengesetz (BUKG), Auslandsumzugskostenverordnung (AUV), Bundesversicherungsanstalt für Angestellte (BfA); Inheritance and Gift Tax Act (§ 19 ErbStG); Debatin/Wassermeyer, Doppelbesteuerung, Kommentar, Stand October 2019; 147 EL) Guidance issued by the Federal Ministry of Finance on Taxation of Employment Income According to the Double Tax Treaties on 03 May 2018).

Copyright

© 2020 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.

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