Tax residence

The two terms unlimited or limited tax liability refers to the degree to be taxed in the income or assets of a person.

Income Tax

Unlimited income tax liability

For wholly taxable persons subject to worldwide income of the taxpayer of the income tax liability. Liable to income tax in accordance with § 1 of the Income Tax Act

• Natural persons who have their domicile or habitual abode in Germany
• German foreign staff, including their relatives, who are paid from a public Checkout

At the request of natural persons shall be treated as unlimited tax liability if they indeed do not live in Germany, but they are subject or their foreign income does not exceed the basic personal allowance their income at least 90 percent of the German income tax.

Sales tax in another country of the same income ( double taxation), § before 34 c paragraph 1 Income Tax Act, that the foreign tax will be deducted from such income under the circumstances which the German income tax, provided that the double burden is not prevented by a double taxation agreement.

Restricted income tax liability

Is limited to tax, who received income in Germany, but is neither domiciled nor ordinarily resident in Germany ( § 49 Income Tax Act). Double taxation agreements are observed.

After previous law were subject to limited taxation of income of a minimum tax of 25% as well as extensive restrictions on the consideration of operating expenses and advertising costs. Since 2008, the minimum tax is abolished and operating expenses and advertising costs are to be considered if they are economically related to the domestic income. Special issues continue to be excluded from the deduction. Taxation is now as unlimited tax liability, but which, in turn, added with the exception of income from employment, the taxable income of the tax-free allowance ( § 50 Section 1 of the Income Tax Act ). Furthermore, there is a limited source taxation of certain taxable income under § 50a, Income Tax Act, such as for artists, athletes or supervisory boards.

Extended limited tax liability

There is also the time-limited extended limited tax liability for German emigrants in a low-tax country. Here all the income of the income tax are subject that are not foreign source income; these are the catalog income ( in accordance with generally limited tax liability ) and above and beyond this additional income arising from the domestic market (for example, credit interest from a savings account ). In addition there are certain income intermediaries of foreign companies that are discussed by virtue of the external tax arrangement as domestic income (§ 5 Foreign Tax Act ).

Corporation

Unlimited tax liability are the corporations mentioned in § 1, the Corporation Tax Act etc. with management or registered office in Germany. The unlimited tax liability extends to the corporate tax on worldwide income.

Limited tax liability exists when neither management nor domiciled in Germany are (§ 2 Corporate Income Tax Act ). The limited tax liability covers only the revenue generated in the Federal Republic.

Inheritance and gift tax

Unlimited tax liability exists if either of the testator, the donor or the purchaser are resident for tax purposes, the full tax liability under the same conditions as in the income tax occurs also more lasting effect as extended unlimited tax liability in German nationals, five years after their departure from Germany. Then the entire asset seizure is taxable, otherwise only the assets of laughter, which is in domestic assets within the meaning of § 121 FL or a right to use such objects ( § 2 para 1 ErbStG).

In addition, the Foreign Tax law also recognizes an extended limited inheritance tax obligation that occurs under the same conditions as the corresponding income tax obligation.

• International Tax Law ( Germany )