'Taxes in Germany in the Year of Relocation: What Income to Report on
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In the year you move to Germany, your tax return often becomes more complicated than usual: your German salary after moving, income earned before the move, foreign bank accounts, rent, investments, and your spouse’s income may all fall within a single calendar year. Not all of this is subject to German tax, but much of it must be reported so that the Finanzamt can correctly calculate the tax rate and apply international rules.
The main point is this: Germany generally does not tax income a second time if, under a double taxation treaty, that income is attributed to another country. However, exempt income can affect the German tax rate through the Progressionsvorbehalt. Therefore, the issue is not simply a matter of “the tax has already been paid at home.”
When Does the German Tax Liability Begin?
For Germany, Wohnsitz and gewöhnlicher Aufenthalt are important. Wohnsitz refers to the residence that a person has at their disposal and can actually use. Gewöhnlicher Aufenthalt refers to the habitual place of residence, which indicates where a person is actually located on a non-temporary basis.
If a person has moved, rented or purchased a residence, and begun living in Germany, unbeschränkte Steuerpflicht—unlimited tax liability—usually arises from that point on. This means that Germany considers the person’s total worldwide income but then applies domestic rules and international agreements.
Anmeldung—that is, registration at the place of residence ()—often helps establish a date, but it does not, in and of itself, replace the actual circumstances. In disputed cases, authorities consider the lease agreement, the move-in date, employment, family, the center of vital interests, and the duration of stay.
The 183-day rule should not be interpreted too rigidly either. In the year of relocation, a person may become a tax resident of Germany before spending 183 days in the country if they already have a Wohnsitz and the center of their life has effectively moved to Germany. There are also exceptions in the opposite direction, especially if the stay was short and the person has left permanently.
Why is the Finanzamt even interested in income earned before moving?
In the calendar year of relocation, a person may have several periods:
- Before moving, he worked and earned income in another country;
- After moving, I started working in Germany;
- Some of the payments were received after I moved, even though they relate to my previous job;
- the spouse continued to receive income abroad;
- Foreign accounts, brokerage assets, or real estate generated income during the year.
For tax purposes, these are different situations. Salary for work performed before moving, income from renting foreign real estate, dividends received after moving, and work performed from Germany for a foreign client are not treated as a single category.
Double taxation treaties (Doppelbesteuerungsabkommen) allocate the right to tax between countries. The BMF emphasizes that such treaties do not create a tax in and of themselves, but rather allocate existing competing rights to tax. Therefore, the outcome depends on the country, the type of income, and the specific treaty.
| Type of Income | What Is Usually Checked | How It Affects Your Tax Return |
|---|---|---|
| Salary for work performed before moving | Where the work was physically performed and to which period the payment relates | Often not subject to double taxation in Germany, but may affect the tax rate |
| German Salary After Relocation | Lohnsteuer withheld by the employer and the employee’s expenses | Usually counts toward the German tax calculation as current income |
| Renting Property Abroad | Where the Property Is Located and What the DTA Says | May Require Anlage AUS and Affect the Tax Rate or Calculation |
| Interest, dividends, brokerage income | When was the income earned, where was tax withheld, is there a tax credit | This often becomes a German tax issue after moving |
| Working from Germany for a foreign company | Where the person actually works and what the status of the activity is | This is no longer “income prior to relocation,” but current income in Germany; see work abroad and taxes in Germany |
Progressionsvorbehalt: Why the Tax Rate Might Increase
The Progressionsvorbehalt is a mechanism whereby certain types of income exempt from German tax are taken into account when determining the tax rate. The amount itself may not be taxed again, but the tax rate for German taxable income becomes higher.
Example: A person moved to Germany in the fall, received a German salary for the last few months of the year, and earned money in another country before moving. German tax is not calculated on the entire amount as if it were German income, but the foreign income can be used to determine the tax rate. Because of this, the tax refund for the year of the move is sometimes less than the person expected.
Conversely, the year of relocation often results in a tax refund anyway: the annual Grundfreibetrag may be factored into the calculation, and the German employer withheld Lohnsteuer as if the salary had been paid for the entire year. The final outcome depends on the amounts, dates, tax class, deductions, and foreign income.
What forms and documents are usually required
Even when filing via ELSTER, the process remains form-based: you must select the attachments that correspond to your types of income. ELSTER specifies that the Hauptvordruck ESt 1 A is supplemented by relevant attachments, while the Anlage WA-ESt is used for cases involving a foreign element, such as the commencement or termination of unlimited tax liability or maintaining a second residence abroad.
The following attachments are often submitted in the year of relocation:
- ESt 1 A — the main tax return form;
- WA-ESt — information and declarations involving a foreign element;
- Annex N — the employee’s German salary and expenses;
- Annex N-AUS — foreign salary;
- Annex AUS — foreign income and foreign taxes;
- Anlage KAP or KAP-INV — capital gains;
- Annex V — rent;
- Annex G or S — business, trade, or self-employment.
| Situation | What to Prepare |
|---|---|
| Working in Germany | Lohnsteuerbescheinigung, employment contract, work-related expenses, travel and equipment receipts |
| Salary before moving | income statements, pay stubs, employment contract, documents proving taxes paid abroad |
| Foreign investments | broker statements, bank statements, withholding tax information, transaction dates |
| Real Estate Rental | lease agreement, expenses, payments, foreign tax documents |
| Self-Employment or Entrepreneurship | records of income and expenses, invoices, contracts, and registration documents, if the business continued after the move |
| Spouse’s income abroad | income statements, proof of marital status, information for a joint tax return |
The German tax authorities are generally not interested in the everyday question of “how much was deposited into my account,” but rather in the income calculated according to tax rules for a specific type of income. Amounts in foreign currency are converted to euros; the specific exchange rate and conversion date depend on the type of income and the documentation, so it’s best to keep the calculation along with the source of the exchange rate.
The Finanzamt may request that documents in a foreign language be translated. It’s practical to gather certificates, statements, and tax notices in advance, but you shouldn’t send unnecessary documents without being asked, unless the program or consultant specifically requests them.
When Filing a Tax Return Is Required
Unless there are special circumstances, an employee is not always required to file a tax return 10_PUBLISHED/content/en/Tax Returns in Germany Who Files, Deadlines, Elster, and Tax Refunds. In the year of relocation, the obligation often arises due to foreign income, the Progressionsvorbehalt, income not subject to German Lohnsteuer withholding, or family-related factors.
For employees, an important benchmark is 410 euros per year. If the total amount of additional income or certain payments—on which German payroll tax was not withheld—exceeds this threshold, filing a tax return is usually required. However, this is only one criterion and not a universal rule that applies in all cases.
You will most likely need to file a tax return if, in the year of your move, there were:
- foreign salary or payments in lieu of salary;
- renting real estate abroad;
- foreign interest, dividends, coupons, or brokerage transactions;
- income from freelancing, a business (Gewerbe), or other self-employment;
- a spouse’s income earned abroad when filing a joint return;
- The Finanzamt has requested that you file a tax return.
The general deadline for mandatory filing for a tax year is usually July 31 of the following year. If the return is prepared by a tax advisor (Steuerberater) or a payroll tax assistance association (Lohnsteuerhilfeverein), the deadline is generally longer. For voluntary filings, a four-year deadline usually applies. If you receive a request from the tax office (Finanzamt), you should follow the deadline specified in the letter.
Joint Tax Return for Spouses
Joint filing (Zusammenveranlagung) can be advantageous if the spouses do not live apart permanently and meet the conditions for joint assessment. This is particularly important in the year of relocation, when one spouse is already working in Germany while the other moved later or earned income abroad.
The tax class during the year is not equal to the final tax amount. Tax classes affect the monthly withholding from your salary, while the final calculation is made in your tax return.
If a spouse lives outside Germany, joint filing is not always automatically possible. For the EU, the EEA, and Switzerland, the rules are generally more lenient; for third countries, they are stricter. In any case, the Finanzamt may request proof of foreign income, because without it, it is impossible to correctly calculate the family tax regime.
What to Do About Remote Work and Your Old Sole Proprietorship After Moving
Income that continued after the actual move cannot usually be simply considered “old income from the country of departure.” If a person lives in Germany and performs work from Germany, the tax and registration implications must be assessed according to German rules.
This applies to freelancing, tutoring, consulting, former sole proprietorships, working for a foreign employer, and providing regular services to clients abroad. In addition to income tax, issues may arise regarding business registration (Gewerbe), self-employment (Freiberuflichkeit), value-added tax (Umsatzsteuer), social insurance, and work permits for specific types of residence permits.
Frequently Asked Questions
Do I need to report income earned before moving?
In many cases, yes. They may be needed for the Progressionsvorbehalt or for the application of the double taxation treaty, even if Germany does not tax them again.
If I moved in December, do I still need to file a tax return?
Possibly. A short period of employment in Germany does not in itself always create a tax obligation, but foreign income, payments subject to the Progressionsvorbehalt, income without Lohnsteuer withholding, or a request from the Finanzamt may make filing a tax return mandatory. Voluntary filing can also be advantageous due to the annual Grundfreibetrag and deductions.
What should you do if you have a foreign broker or bank account?
The mere existence of an account is not usually considered income. What matters are interest, dividends, coupons, sales of assets, and withholding taxes. After moving to Germany, such income must be treated as a German tax matter; see also and the article on German capital gains tax at.
Is transferring personal savings to a German account subject to tax?
Simply transferring your own accumulated funds between your own accounts does not, in and of itself, generate new income. However, if this money generates interest, dividends, or investment gains after you move, the new income may need to be reported on your tax return.
After moving, I received a bonus from my previous job. Where should I report it?
It is necessary to examine the period for which the bonus was accrued, where the work was performed, when the entitlement to payment arose, and what the applicable DTA stipulates. It is best not to automatically attribute such payments to either the “home country” or Germany without reviewing the relevant documents.
Can I simply enter everything in a single line as foreign income?
Usually not. ELSTER and German tax forms distinguish between wages, capital gains, rent, business income, foreign taxes, and cases with a foreign element. If you mix everything together, the Finanzamt may request further clarification or additional documents.
