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Where Taxpayers and Advisers Meet

Double tax? - German 6 month employment

Antse7en
Posts:4
Joined:Tue Feb 27, 2018 12:29 pm
Double tax? - German 6 month employment

Postby Antse7en » Tue Feb 27, 2018 3:26 pm

Hello all,

Hope somebody here can help provide some clarity around potential tax implications.

Background
I was employed with the same UK company Jun 2015 - Jun 2017, before moving to a separate company (part of the same group, different contract) in Munich, Germany Jun 2017. I decided to return to the UK in Dec 2017, having spent a little over 6 months in the new role.

I was paid in Germany via the German company, and taxed at source subject to their tax systems. I have proof of this via payslips etc.

This month, post return to the UK (Feb 2018) I realised my UK salary payment was considerably higher than expected, and contacted HMRC to find a credit had been applied due to not using my personal allowance for the tax year.

HMRC then advised I should complete a self-assessment in April to declare my foreign income over the aforementioned period.

My question is - should I expect to be further taxed on this income? If so, I would like to know now and prepare for it financially.

I am aware there are a number of considerations her, such as agreed treaty, classed as resident in a tax year, etc. I'm just unsure how to navigate the complexity, whilst HMRC have not been helpful.

Thanks in advance

Antse7en
Posts:4
Joined:Tue Feb 27, 2018 12:29 pm

Re: Double tax? - German 6 month employment

Postby Antse7en » Tue Feb 27, 2018 4:35 pm

Update: following the basic guidance online I have determined I will be classified a UK resident - with a total of 189 in the UK. Marginally qualifying beyond the 183 trigger point.

What might this mean for tax payments?

Thanks

etf
Posts:1279
Joined:Mon Nov 02, 2009 5:25 pm

Re: Double tax? - German 6 month employment

Postby etf » Tue Feb 27, 2018 5:55 pm

As a UK resident, under our domestic rules, you will remain subject to UK tax on your worldwide income i.e. including your German earnings.

I suspect it will be a case of claiming a credit for the German tax paid against your UK tax. The tax credit available in the UK will be equal to the LOWER of:

-the German tax suffered

-the UK tax liability on the German earnings.

KR

etf

www.theexpatriatetaxfactory.com

AdamS93
Posts:268
Joined:Tue Sep 26, 2017 6:28 pm

Re: Double tax? - German 6 month employment

Postby AdamS93 » Tue Feb 27, 2018 7:02 pm

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/554740/2010_Germany_UK_as_amended_2014.pdf

This is the UK - Germany double taxation treaty. Nice bed time reading :shock:

I had a quick look and it looks like the employment income will be subject to tax in one country, not both - but which country it is taxable in depends on your situation.

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: Double tax? - German 6 month employment

Postby maths » Tue Feb 27, 2018 10:59 pm

As etf points out as a resident of the UK but working in Germany you will have an exposure to German tax and also UK tax.

Thus, any UK tax charge will be offset by way of a tax credit for any German tax paid.

bd6759
Posts:4262
Joined:Sat Feb 01, 2014 3:26 pm

Re: Double tax? - German 6 month employment

Postby bd6759 » Wed Feb 28, 2018 1:31 am

Only exposed to German tax if there for more than 183 days and remuneration paid or borne by an employer who has a presence there.

Antse7en
Posts:4
Joined:Tue Feb 27, 2018 12:29 pm

Re: Double tax? - German 6 month employment

Postby Antse7en » Wed Feb 28, 2018 11:53 am

Thanks all for your responses - really helpful.

This adds nicely to the complexity of my personal circumstances, being that I am already a UK/US dual national and have to submit a multitude of paperwork each year. I thought life should be relatively simple as a PAYE!

I think my course of action will simply be to wait until I receive access to the online assessment (which HMRC advise they have already triggered) and then seek some brief professional advice with regards to completing the return in real time.

Thanks again

bd6759
Posts:4262
Joined:Sat Feb 01, 2014 3:26 pm

Re: Double tax? - German 6 month employment

Postby bd6759 » Wed Feb 28, 2018 2:33 pm

Havig read your post propertly, you are clearly liable to German tax for the peirod you were there. You need to get your german tax liability sorted first. The tax deducted from your pay is unlikely to represent your correct tax liability. You can only set the amount of German tax that you are correctly liable to pay against your UK tax.

Antse7en
Posts:4
Joined:Tue Feb 27, 2018 12:29 pm

Re: Double tax? - German 6 month employment

Postby Antse7en » Wed Feb 28, 2018 3:22 pm

You need to get your german tax liability sorted first. The tax deducted from your pay is unlikely to represent your correct tax liability. You can only set the amount of German tax that you are correctly liable to pay against your UK tax.
Thank you.

Is there something I should be doing prior to the April self-assessment with regards to this point? Or will that process capture the relevant detail?

I have full copies of my German income including employment income, employment tax, reunification tax, church tax, pension etc.

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: Double tax? - German 6 month employment

Postby maths » Wed Feb 28, 2018 5:41 pm

Only exposed to German tax if there for more than 183 days and remuneration paid or borne by an employer who has a presence there.
As there appears to be a contract with a German employer then the 183 days limit is not in point.


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