TAX related issues

This was written in the beginning of 2013. Changes may have been made why I can guarantee that the information given here are up to date.

Believing that you can escape your local Tax Authorities by moving to Germany is a bit naive. If you chose to have a month where you are officially working in one country and living in another you will for sure have to talk to the Tax Authorities in two countries. Coming from Denmark I thought that I could contact the local Authorities and get all my questions answered, but I couldn’t have been more wrong. In the situation I was in, I had to contact the main TAX Authorities of the country. The local Authorities were not allowed to talk about the topic at all. According to my local contact person there are different rules between different countries. This makes it so complicated, that question to this topic has to be handled centrally.

This though gives a few challenges. These days if you want to talk to authorities it has to be done electronically. And this is about the first step where things go wrong. Apparently there are only clear rules between Denmark and Sweden. If you move to Germany there aren’t clear procedures mentioned anywhere. I therefore decided to make this page to try to help you out in case you want to do what I did.

First of all, give the Tax Authorities a call. You are most probably not the only one calling, so you will be on the line for quite some time before it is your turn. The first question I received was if I have family or a girlfriend in Denmark when I move to Germany. If I had, this would put me in a situation where I got strong relations to Denmark – meaning that I would have to pay taxes in Germany AND in Denmark. If there are no close relations to Denmark, then the next long row of question start to come.

If you have property in the country where you come from (in my case Denmark) then you have to pay taxes in both countries if you move to another country. I rented an apartment in Denmark and soon got rid of it, so that made it all a lot easier. It is with this situation in mind I will write the following.

Paper work

No public authority without paper work. First of all you will need a document called 04.029. This should be logical for everyone...You can most probably download it from the Tax Authority homepage. It is in PDF and of course you can’t fill it out electronically and save it. No - you need to fill it out electronically and then print it out. Then Scan the page so you got a new document which you then can send back to the authorities electronically. Isn’t this just brilliant? Furthermore if you have a rented apartment you need to scan in your official paper to the owner that you have quit your home. This also has to be sent electronically. Now don’t even start to think that this can be done via mail. No – there is a form for this very well hidden on the homepage of the Tax Authorities. It took me quite a while before I found it hidden in a corner of cyber space. The advantages should apparently be, that you then get a receipt confirming that you have send the necessary information.

Reporting you income to the authorities

At this point life starts to become slightly complicated - especially if you decide not to move to Germany on the first of January. In Denmark the company you come from will pay you the earned “Vacation money”. This can be up to an extra 5 weeks of salary. The Tax Authorities believe this is a normal part of your monthly salary. They then use a little math and convert that to a one year income. This way you look as if you earned more money than the CSO of any American Bank. You can’t even imagine the amount of Tax you are set to pay for that part of the year you worked in Denmark. You therefore have to contact the TAX Authorities again via phone. And living on the other side of the boarder this is now getting a very expensive thing to do unless you have managed to get a deal on flat rate for the entire Europe. Together with a representative you then have to make the necessary changes to their hopeless math. Be aware that you have to tell them what is right – not the other way around. This is scary. They will do anything in their power to make you pay as much taxes as possible. You need an eye on every finger. I can only say this: Check, check and double and triple check.

If you have some overtime which you need to check do yourself a favour and get that behind you before you move. If you get the overtime paid this will also have to be recalculated to a one year income and you will have to argue with the Authorities that this is a once in a life time thing. The rules are not clear here. I do hope that this will change over time.

Deductibles

REMEMBER: If you had any expenses moving to Germany, and the expenses are caused by the fact that you are to start in a new job, it is deductable – at least up to a certain level. It is therefore very important that you keep all receipts.