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Where Taxpayers and Advisers Meet

German tax foreign resident

Fitzie
Posts:2
Joined:Mon Jul 24, 2017 3:38 am
German tax foreign resident

Postby Fitzie » Mon Jul 24, 2017 3:43 am

I am an Australian citizen (originally from England) and have grandparents in Germany. In about 2012 my grandmother put a fund in my name (turns out this was some kind of property rental fund, therefore the income seems to count as rental income). I did not receive any money from it until 2016 (fund being wrapped up & I'll get second half of payment this year).

However I have statement in German (that I don't understand properly) that appears to show an income each year. However when I emailed the fund managers they've told me there was no payment due to me and that it was 'repaying the loan'.

I have now been contacted by the German tax authority. Initially I thought this was just regarding the 2016 payment but it seems that they think I owe tax for each year (for now they've only given me information for 2012).

So my question is does it sound right that even though I did not actually receive any money from the fund that I would still have to pay the tax on it?

I have engaged a German accountant based in Sydney but he isn't really answering that question

AmanSood
Posts:216
Joined:Mon Jan 09, 2017 4:12 pm

Re: German tax foreign resident

Postby AmanSood » Mon Jul 24, 2017 9:17 am

Hi Fitzie, it really depends on how the fund operates. So for example, if you had access to the income and could take this out each year, then the German tax authorities would treat you as receiving the income and look to tax you on this. If however, you had no access to the income until paid out in 2016, then there would be a basis to say that the tax is only due in 2016 when payment is received. If tax is due in Germany then you can get a tax credit for it in Australia so that you do not suffer double taxation. I have a network of international tax advisors some of which are located in Germany and would be able to assist and I would be happy to put you in touch with them.

Thanks

Aman
Advising on UK employment, expatriate and personal taxes
aman.sood@e-taxconsulting.com.
+44 (0) 207 846 0155

Fitzie
Posts:2
Joined:Mon Jul 24, 2017 3:38 am

Re: German tax foreign resident

Postby Fitzie » Wed Jul 26, 2017 1:16 am

Hi Aman

I have had no access to the money (whenever I asked I was told I wouldn't get payment till 2020). Unfortunately I have already engaged (and paid for a German tax accountant in Australia) but he seems unable to explain the situation clearly to me. He keeps saying that the statements look like I recieved money, therefore I have to pay tax (even though I did not actually receive any money).

I'm not sure how else I can prove I did not receive the money.

Thank you
Fitzie

AmanSood
Posts:216
Joined:Mon Jan 09, 2017 4:12 pm

Re: German tax foreign resident

Postby AmanSood » Wed Jul 26, 2017 1:12 pm

Unfortunately no straightforward answer. From a commerical/practical perspective, I would say it depends on the amount of tax at stake. If it's not significant then you may be better off settling the tax in Germany and getting a credit for any tax due in Australia. If however, the amounts involved are significant, then worth getting another German tax advisor (ideally someone based in Germany) who would be able to assist and support you in dealing with the German tax authorities.
Advising on UK employment, expatriate and personal taxes
aman.sood@e-taxconsulting.com.
+44 (0) 207 846 0155


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