When is it advisable to apply for unlimited tax liability?
Individuals who live abroad and earn and pay tax on the vast majority of their income in Germany can apply to be treated as fully liable to income tax in Germany under certain conditions (so-called cross-border commuters according to § 1 para. 3 EStG).
Whether this is possible depends solely on certain income limits:
- The domestic income taxed in Germany must account for at least 90% of the total income (relative limit). Or
- the foreign income not taxed in Germany must not exceed the tax-free allowance (absolute limit). The tax-free allowance in 2024 is 11.784 Euro for single persons and 23.568 Euro for married couples.
The advantage of unlimited tax liability on application is that, unlike with limited tax liability, you can claim all personal tax benefits as well as a whole range of family-related benefits. This includes, for example, the tax deduction for pension expenses, special expenses, extraordinary burdens.
There is a special advantage if you are a national of an EU/EEA member state and your spouse or child resides in an EU/EEA member state. It is not necessary for the spouse to also be a national of an EU/EEA member state. In this case, you can also benefit from family-related tax advantages: These include joint assessment with the splitting tariff or income tax deduction according to tax class III, the doubling of marriage-related allowances and maximum amounts such as the special expenses allowance, maximum pension amount, saver’s allowance, and the relief amount for single parents.
