Are the income-related expenses in Form N-AUS the same as in Form N?
If wages are tax-free in Germany due to a double taxation agreement or the Foreign Employment Decree, expenses economically related to the tax-free foreign income cannot be deducted as income-related expenses when determining the income taxable in Germany (due to Section 3c EStG). Therefore, they must not be entered in "Form N".
However, since the tax-free wages are subject to the progression clause, you may deduct your expenses "as if they were income-related expenses" from the relevant foreign income. This reduces the amount of foreign income included in the progression clause, which increases the taxable income. Enter these expenses in "Form N-AUS".
