Who is subject to limited tax liability?
Limited income tax liability under Section 1 (4) EStG applies to individuals who
- do not have a residence or habitual abode in Germany,
- have certain domestic income as defined in Section 49 EStG, and
- are not subject to unlimited income tax liability on application according to Section 1 (3) EStG (cross-border commuters) or
- extended unlimited income tax liability according to Section 1 (2) EStG.
For them, the tax is collected through tax deduction or by means of an assessment for limited tax liability.
Note: Special regulations apply to cross-border commuters from France, Austria, and Switzerland.
Numerous personal and family-related tax benefits are not taken into account in the assessment for limited tax liability, including:
- Spouse splitting (joint assessment) cannot be claimed.
- Widow's splitting in the year following the bereavement is not granted (Section 32a (6) EStG).
- Extraordinary burdens cannot be claimed for tax purposes (Sections 33, 33a, 33b EStG).
- A disability allowance and care allowance are not available to you (Section 33b EStG).
- Child allowance and allowances for care, education, and training are not granted (Section 32 EStG).
- The relief amount for single parents is not available to you (Section 24b EStG).
- The tax reduction for domestic help, household-related services, and craftsmen's services in a flat in the EU/EEA abroad has not been granted since 2009 (Section 35a EStG).
- Business expenses are generally only deductible if proven and if they are directly economically related to domestic income.
- However, the flat rate for business expenses of 1.230 Euro for income from employment is also taken into account if no higher business expenses related to the income are proven.
- For pension income, at least the flat rate for business expenses of 102 Euro is taken into account.
