Taxation of international executives
Please see explanations regarding resident/non-residents.
For non-residents, the tax obligations are 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 generally 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.
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.
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.
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