Double taxation for US expats in Germany

On Behalf of | Dec 7, 2021 | International Tax and Business Entities |

Thousands of US citizens reside in Germany, so it’s vital to understand how German residency affects US taxes. Many American citizens are attracted to the business-friendly culture of Germany, and some reside in Germany while serving at a US military duty station. Regardless of where you live in Germany and your reason for residing in the country, you should have a clear understanding of your tax obligations in both Germany and the US. If you’re a resident of NYC, Munich, or Orlando, here is some information you need to know for foreign taxation in both countries.

US expat taxes

If you’re a US citizen or a permanent resident of Germany, you must file expatriate tax returns with the US government annually no matter where you live. In addition to filing your tax returns for income, you should also follow foreign taxation rules that include disclosing your assets in international bank accounts by using FinCEN Form 114.

The US is one of the few governments that tax international income earned by US citizens and permanent citizens who live overseas. However, there are ways to protect yourself from double taxation including the Foreign Earned Income Exclusion, tax credits, or exclusions on foreign housing.

Are you a resident of Germany?

Expats are considered German residents if they intend to stay in the country for six months or longer. You must prove residency by having a residential address in Germany are being present in the country that indicates you’ll be there long-term, such as being stationed at a military base. Foreign taxation regulations indicate that if you leave Germany without a residence, bank accounts, or another type of long-term connection, your tax residency status will be terminated.

Being a German national is not enough to determine your residency for tax purposes. If you leave Germany, you will no longer be classified as a resident when it comes to your taxes.