If you earn income abroad, you may need to pay taxes on it in Germany. Whether and how this happens depends on tax regulations and agreements between countries. Here’s what you should consider.
- Worldwide Income Principle: If you live in Germany, you must declare your total income—regardless of where you earned it.
- Avoiding Double Taxation: Special agreements often ensure that income is only taxed in one country, or that foreign taxes paid are credited.
- Reporting Requirements: Foreign income must be included in your tax return—whether and how it is taxed depends on the rules of the respective country.
🚀 Your Guide
- When Is Foreign Income Taxed in Germany?
- Where Do You Enter Foreign Income in the Taxfix App?
- How to Avoid Double Taxation
- Which Types of Income Are Taxable?
- Tax Payment & Reporting Obligations
When Is Foreign Income Taxed in Germany?
🏠 Do you live or have your habitual residence in Germany? Then you are fully liable for tax here. This means you must declare your entire income—including foreign earnings.
💡 Many countries tax income at its source (source country principle). To avoid double taxation, double taxation agreements (DTA) specify which country has the right to tax the income.
Where Do You Enter Foreign Income in the Taxfix App?
📱 In the Taxfix app, you can easily enter your foreign income:
- Select the "About You" category.
- Under "Other Income", choose "Income from Abroad".
💡 This includes, for example:
🏢 Salary from work abroad
🏡 Rental income from foreign property (e.g., a vacation home)
🌾 Income from agriculture and forestry, if the land is abroad
This applies even if the income was already taxed abroad!
How to Avoid Double Taxation
✏ Exemption Method: Foreign income remains tax-free in Germany but is considered for calculating your tax rate (progression clause).
🔄 Credit Method: Your income is taxed both abroad and in Germany, but the tax paid abroad can be credited against your German tax liability.
Which method applies depends on the respective double taxation agreement.
Which Types of Income Are Taxable?
🌎 Foreign Income
👔 Salary during a stay abroad → Tax-free, but subject to the progression clause.
💰 Capital gains (interest, dividends) → Not taxable in Germany and do not affect the tax rate.
🇩🇪 Foreign Income in Germany
👨💻 Salary from a foreign employer for work in Germany → Fully taxable.
📊 Salary from a foreign employer for previous work abroad → Not directly taxable, but subject to the progression clause.
🏡 Rental income from the EU/EEA (except Spain) → Tax-free.
🌾 Income from agriculture and forestry in the EU/EEA (except Spain) → Tax-free.
🏦 Interest and dividends → Taxed like German capital gains. If the savings allowance is exceeded, capital gains tax applies. Any foreign withholding tax paid can be credited.
Tax Payment & Reporting Obligations
💳 Advance Payments: If you owe income tax, the tax office may require quarterly advance payments.
📝 Tax Return Obligation: Foreign income must be reported in the tax return. The deadline is usually July 31 of the following year (extended if you use a tax advisor).
📑 Proof of Taxes Paid: If you use the credit method, you must provide proof of the taxes paid abroad.
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Still have questions?
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