Tax liability after leaving Germany

[libelle]

Hello!

I left Germany on Dec 31, 2022. I still work for the same employer, but in a different affiliate in a different country. I got a pay statement from Germany in 2023 because some restricted Stock Units (RSUs) that I had earned during employment in Germany vested and apparently they are taxed there. Wage taxes were withheld from the vested RSUs (about 35%) and the total worth was approximately 9K Euro.

Based on the information I can find:
- My tax should be 0 in Germany because the amount is under 10,908 Euro.
- Because I was a non-resident the whole year, my worldwide income is not considered in calculating my tax rate.
- I am not allowed to file a tax return to get the money back, so my employer screwed up by withholding the wage tax at that amount.

Has anyone been in this situation before? Thoughts on if the above is correct/incorrect? My employer has been no help at all. The accounting firm they contracted to do taxes for international transfers also has no interest as they see me as "no obligation to file" and don't care that I was taxed when I shouldn't have been.

Many thanks!

[editorL]

Hi libelle,

welcome to this forum. Feel free to write something in the Member introduction section of this forum.

[PandaMunich]

I left Germany on Dec 31, 2022. I still work for the same employer, but in a different affiliate in a different country. I got a pay statement from Germany in 2023 because some restricted Stock Units (RSUs) that I had earned during employment in Germany vested and apparently they are taxed there. Wage taxes were withheld from the vested RSUs (about 35%) and the total worth was approximately 9K Euro.

Based on the information I can find:
- My tax should be 0 in Germany because the amount is under 10,908 Euro.
- Because I was a non-resident the whole year, my worldwide income is not considered in calculating my tax rate.
- I am not allowed to file a tax return to get the money back, so my employer screwed up by withholding the wage tax at that amount.

Has anyone been in this situation before? Thoughts on if the above is correct/incorrect? My employer has been no help at all. The accounting firm they contracted to do taxes for international transfers also has no interest as they see me as "no obligation to file" and don't care that I was taxed when I shouldn't have been.

You earned these RSU for several years of "service" to your employer.
--> you are obliged to file a tax return for 2023, in which your worldwide income falls under Progressionsvorbehalt, i.e. it will raise your German income tax rate on this RSU income.

I suggest you show that accounting firm this Deloitte article which explains why you have to file a German tax return for 2023: https://mobile-deloitte--tax--news-de.t ... r_pto=wapp

[libelle]

Thank you! I read the article, and it seems like none of the conditions where taxes must be filed apply to me:

assessment of income tax on an employee subject to limited tax liability must also be made if the employee receives wages from several (domestic) employers at the same time (not my case), the employer has calculated the wage tax on remuneration for activities spanning several years or severance pay according to the so-called “fifths rule” (not my case - they taxed me at 41% + soli + church tax) or the employer has calculated the wage tax on other income and the wages from previous employment relationships in the calendar year have not been taken into account (not my case - it looks like they used my old tax bracket)

41% is apparently not even a tax rate so I don't know how they came up with that. I have asked my employer to guarantee they would pay for penalties if Germany has an issue with me not filing a return and find taxes due, but of course they won't. I have begged for months to have a return filed but the contracted firm adamantly refuses. I guess the risk is low that Germany would come after me since I am not an EU citizen and have no residency there??

[PandaMunich]

assessment of income tax on an employee subject to limited tax liability must also be made if the employee receives wages from several (domestic) employers at the same time (not my case), the employer has calculated the wage tax on remuneration for activities spanning several years or severance pay according to the so-called “fifths rule” (not my case - they taxed me at 41% + soli + church tax) or the employer has calculated the wage tax on other income and the wages from previous employment relationships in the calendar year have not been taken into account (not my case - it looks like they used my old tax bracket)

Your case is:
the employer has calculated the wage tax on remuneration for activities spanning several years ... according to the so-called “fifths rule” (not my case - they taxed me at 41% + soli + church tax)
The Fünftelregelung is a way of calculating the income tax rate.
For high earners, the Fünftelregelung gives you the same high tax rate, as if you do not use the Fünftelregelung.

Please do as I asked you to and send the German version of that Deloitte article to the "accounting firm they contracted to do taxes for international transfers".
--> they will then do the tax return for you.

41% is apparently not even a tax rate so I don't know how they came up with that.

Of course it's a possible tax rate.
We have gliding tax rates, please have a look at this graph: https://expertise.tax/en/faq-german-tax ... income_tax

[libelle]

Ok, thanks for explaining about the fifth’s rule - the info I had found said that if they had used that to calculate the tax, it would have been zero.

Of course there is a 41% rate - I just didn’t think there was for me with 170k of income when I was in DE.

I will send them the article.