Double taxation UK Germany
Thread poster: Natalia Elo

Natalia Elo  Identity Verified
Germany
Local time: 13:57
Member (2004)
English to Russian
+ ...
Oct 17, 2008

Dear all,

I have a problem and wonder, if anyone has solved the similar problem before. Last August I moved from Germany to the UK. Before that I contacted my Finanzamt on the matter of taxation. They said that as I spend most of this year in Germany I will have to pay taxes for the whole 2008 year in Germany. Actually I have paid already a big chunk of it in Vorauszahlungen.

Now I have registered as a self-empolyed in the UK. The Revenue will send me Tax Returns in April and want me to pay taxes from the day I arrived to the UK, i.e. 27 August. So obviously the last four months of the year will be double-taxed.

I don't know how to deal if it. So far despite a number of attempts I failed to explain to tax authorities in both countries, where is my problem. Germans say that I have to pay the tax up to the end of the year and that's it and British say that I have to pay taxes from the first day I arrived to the UK. Each one is saying that if I'm not happy with what they're saying I should contact the other country's authority. One German official said that I should contact a tax adviser, becuase "it is a complex matter", and an official from HMRC said me that I should go to a library and try to find information myself.

I am rather reluctant so far to pay a Tax adviser, becuase I think, that tax authoritites should know tax laws themselves and should be able to explain citizens their rights. I have found today a text of the Double Taxation Convention between Germany and the UK (http://tinyurl.com/68ggep ), but haven't read it yet. Will do it as soon as I can.

As I said, I just wonder if someone had done this before, becuase it is indeed a complex matter and I would appreciate if you could push me in the right directions.

Best regards,
Natalia


Direct link Reply with quote
 

Claire Cox
United Kingdom
Local time: 12:57
French to English
+ ...
Accountant Oct 17, 2008

I really think the best solution is to consult a tax accountant, especially in this complex area. The problem with contacting the tax office helplines is that you're often speaking to call centre staff who aren't qualified to deal with more complex issues. I've had conflicting advice from them in the past, so prefer to seek professional advice. It may involve spending in the first instance but if you can avoid paying double taxes at the end it will be well worthwhile.

Good luck!

Claire


Direct link Reply with quote
 

Gillian Searl  Identity Verified
United Kingdom
Local time: 12:57
Member (2004)
German to English
When I came back from Germany... Oct 17, 2008

You are no longer subject to German tax from when you leave Germany but you have to know about the Progressionsvorbehalt. That means you have to declare your full income for the entire tax year in Germany. You also tell them what you earned for the period you were resident there. They use that to set the rate of tax. That rate of tax is then only applied to the income you earned in the period you were resident in Germany. Complicated isn't it?

By the way I discovered that I should have stayed in Germany at least as far as tax is concerned - I am now paying way too much UK tax.

In the UK, you do know that at the end of Jan 09 (if you have to declare tax for 2006/7, or end of Jan 2010 if your first UK tax year is 2007/8) you have to pay 100% of the tax you owe PLUS 50% extra - that is a real killer. Start saving now!!!!!


Direct link Reply with quote
 

Natalia Elo  Identity Verified
Germany
Local time: 13:57
Member (2004)
English to Russian
+ ...
TOPIC STARTER
OMG Oct 17, 2008

Gillian Searl wrote:

You are no longer subject to German tax from when you leave Germany but you have to know about the Progressionsvorbehalt. That means you have to declare your full income for the entire tax year in Germany. You also tell them what you earned for the period you were resident there. They use that to set the rate of tax.


Gillian, I'm sorry I didn't understand to whom you referring by 'they', UK or German tax authorities.

That rate of tax is then only applied to the income you earned in the period you were resident in Germany. Complicated isn't it?
The rate of tax in the UK is calculated accoring to my earnings in Germany? Did I get it right?

Oh, yes it is.


In the UK, you do know that at the end of Jan 09 (if you have to declare tax for 2006/7, or end of Jan 2010 if your first UK tax year is 2007/8) you have to pay 100% of the tax you owe PLUS 50% extra - that is a real killer. Start saving now!!!!!

No, I didn't. This is by the way another part of problem, you are saying about tax year as 2007/8, because it is from April to April, whereas in Germany it is a calender year.

I paid my taxes for 2006 in Germany and will pay my taxes for 2007 soon. For the year 2008 I did three Vosauszahlungen (pardon me for mixing languages) and will do one more in December. In the beginning of 2009 I will have to declare taxes in Germany and pay taxes for the year 2008.

So I guess my first tax year in the UK is 2008/9, when I have to pay taxes?

To make it more complicated, I will return to Germany next summer.


Direct link Reply with quote
 

Gillian Searl  Identity Verified
United Kingdom
Local time: 12:57
Member (2004)
German to English
Let's do this by phone Oct 17, 2008

contact me via my website

Direct link Reply with quote
 

Marijke Singer  Identity Verified
United Kingdom
Local time: 12:57
Dutch to English
+ ...
Double taxation Oct 17, 2008

Natalia Elo wrote:

[No, I didn't. This is by the way another part of problem, you are saying about tax year as 2007/8, because it is from April to April, whereas in Germany it is a calender year.



Hi Natalia,

I used to pay taxes in the Netherlands and the UK for what I earned in each country (I used to have 2 businesses, one in each country).

The above is not true. I pay taxes based on the calendar year here in the UK. You can state that you wish to do so and then you will NOT be paying taxes from April to April.

As I see your situation, you should be declaring what you earn in Germany to the German authorities and what you earn in the UK to the UK authorities. For this you should also state where you where resident (i.e. living) and where you were domicilled (for tax purposes). You should, therefore, declare your full income to both authorities but specify what you earned in each particular country. There is a special form to do this in the UK but I cannot remember its code. Although Gillian is right and you will be paying the extra 50% as well as the relevant tax for the year, you will have already collected the money and should, in theory and if you are good, have put the money away to cover the tax bill. If you find you cannot pay, talking to the tax authorities helps.


Direct link Reply with quote
 

Natalia Elo  Identity Verified
Germany
Local time: 13:57
Member (2004)
English to Russian
+ ...
TOPIC STARTER
50% extra Oct 17, 2008



[Edited at 2008-10-17 20:56]


Direct link Reply with quote
 

Marijke Singer  Identity Verified
United Kingdom
Local time: 12:57
Dutch to English
+ ...
The mysteries of tax Oct 17, 2008

Natalia Elo wrote:


I don't get it. The 50 %. Is it for everone? Is it for newly registered self-employed? Or is it for those, who recently moved to the UK. Is it like, if the UK tax authorities say I have to pay £2,000.00 taxes for 2008, it automatically becomes £3,000.00?

Tried to search HMRC site, but couldn't find anything.


No, it is just the first year because you are 'behind' with paying your taxes.
I have been paying taxes in the UK since 1998.
At the end of January 2008, I paid half my taxes for 2007 although I only have to return the tax return for this year by either October 2008 (the UK authorities do the calculatins) or January 2009 (I do the calculations). At the end of July, I paid the second half for 2007 (these amounts are, therefore, estimates based on the previous year; when they review my actual tax return I will not have to pay more, I will get money back or I will pay more depending on whether my income for 2007 was the same, more or less than my income in 2006). Since you will be providing the UK tax authorities with your very first return you do not have a 'history' and, therefore, there is no estimate of what you earn. You will have to pay your taxes for the applicable year and 50% of this amount as the 'estimate' for the next year. This will ensure that you are exactly one year behind with paying your taxes.


Direct link Reply with quote
 

Natalia Elo  Identity Verified
Germany
Local time: 13:57
Member (2004)
English to Russian
+ ...
TOPIC STARTER
Long live Proz.com! Oct 17, 2008

Dear Marijke and dear Gillian!

Thank you so much. I guess I will be able to sleep tonight after all.

Gillian explained me also a lot on the phone.

I wish everyone a nice weekend!
Natalia


Direct link Reply with quote
 


To report site rules violations or get help, contact a site moderator:


You can also contact site staff by submitting a support request »

Double taxation UK Germany

Advanced search







Anycount & Translation Office 3000
Translation Office 3000

Translation Office 3000 is an advanced accounting tool for freelance translators and small agencies. TO3000 easily and seamlessly integrates with the business life of professional freelance translators.

More info »
memoQ translator pro
Kilgray's memoQ is the world's fastest developing integrated localization & translation environment rendering you more productive and efficient.

With our advanced file filters, unlimited language and advanced file support, memoQ translator pro has been designed for translators and reviewers who work on their own, with other translators or in team-based translation projects.

More info »



Forums
  • All of ProZ.com
  • Term search
  • Jobs
  • Forums
  • Multiple search