# Australian moving to Germany tax and tax treaty questions



## Pheadrus

I will be moving to Germany to take a position. I have some tax related questions. Here is my situation: I am an AU citizen. My wife is a dual AU/DE citizen. We have a mortgage on our family home in AU. My (lots of) questions are:

Initially, I will be starting work in Germany, whilst my wife will remain working in AU. Earning about the same. What is the most beneficial combination for us; file separate tax return in the respective countries where we work? Would I then be considered Category I in Germany as my wife lives apart? Should we file jointly in one of the countries? which one?
Later, my wife will join me in DE. She will likely be unemployed for a while and then earn less than me initially. Should we then file tax return in DE, where I am class IV and she is III?
There is a new tax treaty between AU and DE ( here). I don't understand it. Can anyone explain how this affect my situation?
Article 19 of this treaty says that professorships are exempt somehow. Can anyone explain what this means?
I called the ATO to enquire. They told me that if I remain an AU resident, I will have to pay any gap in the level of taxation between the countries in AU. Is that right? Would it be more beneficial to seek residence in DE then?
Whilst living in DE, our AU family home will be rented out. The ATO told me that I will have to pay tax on the rental income, but won't be able to claim against the rental I will be paying in DE. Sounds a bit unfair, but anyway, should I be able to claim the mortgage payments against the rental income? Would it be better to declare the rental income and mortgage cost in my DE tax return?
The ATO also said something about additional tax, if I later sell the house and haven't returned to AU within 6yrs. Can anyone explain better than the ATO?:confused2:

This is all so complicated and overwhelming for me:noidea:. Any advice would be much appreciated.


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## Nononymous

I can't really give you too much advice here, not being Australian. I do however have an academic spouse and have lived in Germany on multiple occasions (though we've always miraculously escaped the German tax system through a combination of her having tax-free research money, coming on sabbatical with her university salary, my once working for an embassy, and our keeping most of our recent visits below the six-month threshold).

For the German questions you'd be best served finding a Steuerberater with a bit of international experience. That shouldn't be too hard in Erlangen, given the expat population in the area - not only the university, but Adidas and Siemens and other companies nearby. 

The article 19 you mention probably concerns visiting academics being paid by their home institutions. They would not be taxed by Germany. (That's always been my understanding with sabbaticals, where tax-wise one generally just behaves as if they never left home.) I would however look into the terms of your own employment - if you're on some sort of visiting fellowship or research grant, rather than regular faculty salary, it may not be taxable. That's quite common with post-docs and so on, but five years sounds more like a real job. Dig into this, however.

I know nothing about Australia, but if it's anything like Canada you could potentially apply for non-resident status and be free of of any Australian tax filing obligations other than investment and rental income - potentially very useful if your German income is not taxed! If you really are gone for five years it sounds as though the rent would be taxable but with enough write-offs you can probably keep the bill down. There might also be capital gains if you sell the house before moving back into it. In my limited understanding of these things, you'd owe tax for the rental to Australia, on account of the property being located there, and might not even need to declare it on your German taxes.


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## CookehMonsta2

You sure you want to move to Germany? Enjoy the bureaucracy nightmare. the ATO will seem like Maccas in comparison. 

The complexity and confusion won't end, it just gets worse.


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## Nononymous

Obviously you've had a poor experience, sorry to hear that. Things can go very smoothly for visiting academics. It really depends on what you're doing, where you're located, and your ability to speak the language and/or charm bureaucrats.


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## Pheadrus

CookehMonsta2 said:


> You sure you want to move to Germany? Enjoy the bureaucracy nightmare. the ATO will seem like Maccas in comparison.
> 
> The complexity and confusion won't end, it just gets worse.


functioning bureaucracy vs incompetence. As a former federal gov employee, I think I might try the functioning bureaucracy for a while. #CensusFail. Also see ABC's excellent documentary series Utopia.


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## kanadanicht

Your AU rental income may be taxable in AU only - depends on treaties. Make sure you get a good tax adviser, the bad ones may not know about all the treaties and then make you pay more so they cover themselves. My DE rental income is taxable only in DE, which is great because I earn all my other income in CA and therefore stay in a low DE tax bracket.

There may indeed be favourable tax exemptions for academics.


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## Nononymous

The big simplification for academics is that if one came on a Canadian or Australian salary for a visit of up to two years, that's just taxed at home, you don't need to deal with the German system at all (not really an exemption, but makes life much easier).

Some German research fellowships can be tax-exempt, however. This is something the OP should look into. If he/she can arrange it to only pay Australian tax on the rental, and the German funding is tax-free (and either excluded from Australian tax on the basis of non-residency or simply not reported because it's not "income") then it's a very nice arrangement. No accountant fees and very little tax. But obviously a different story if the German income is a regular taxable salary.

It's a bit more complicated once a spouse begins working in Germany, I imagine.


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## CookehMonsta2

No, I haven't had a singular, bad experience in Germany. I am a European(Italian-German) who migrated to Australia and eventually became a citizen. Bureaucracy in Germany is objectively awful, matched only by the arrogance of the bureaucratic functionaries. At least in italy we know it's bad, you'll get some empathy from the person at the burgeramt/post office. 

Australia offers equal levels of public services at such a reduced level of complexity its amazing. You guys don't know how good you have it. I never once had to actually go into a government office in Australia, you can do everything online. Have a tax problem? Call the ATO, they are some of the most reasonable people I've found in my world travels.

I came back to Europe, my memories tinged in nostalgia, and awoke to the ridiculous reality I had known only too well. I simply refused to:

1. work twice as hard for half the salary
2. waste brain power and anger and time going from one office to the next carrying around pieces of stupid paper
3. actually fear the law here, because you get one thing wrong, you're stuffed. That's not how an honest citizen should ever need to feel.

F%^K EUROPE BACKWARDS!!!


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