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Steuerfreier Arbeitslohn (Sonderfälle)

 

What is tax-free wages under DBA/ATE?

This refers to tax-free wages under a double taxation agreement (DTA) or foreign employment decree (FED). A DTA stipulates how employees working abroad must tax their income to avoid double taxation. Wages for work abroad can be tax-free under the foreign employment decree if there is no double taxation agreement with the relevant country and the work lasts for at least three consecutive months. Illness or holiday does not affect the duration of employment but is not counted towards the three-month period.

If your salary is taxable abroad, you will be exempt from tax in Germany under a DTA or FED. However, income taxed abroad is included in the progression clause in Germany. This means that a total income is calculated from the foreign income and other income in Germany. This total income results in a higher tax rate, but only the income earned in Germany is taxed at this rate.

Exceptions:

  • For France, Austria, and Switzerland, a special cross-border commuter regulation applies under the double taxation agreement. If you work in these countries, the wages are taxed in the country of residence, Germany.
  • In Switzerland, the employer may deduct a wage tax of 4.5 percent, which is credited against the tax in Germany.
  • Civil servants and public sector employees always tax their income in the country where they work, as the principle of the paying state applies.

Note: The foreign employment decree has recently been revised. We would like to draw your attention to a particularly important new provision: employees must prove that their wages abroad were subject to a minimum taxation. If you cannot provide proof or if there is no minimum taxation, the foreign employment decree and thus the tax exemption in Germany do not apply. The new regulations apply to wages and other remuneration paid after 31.12.2022 or received by the employee after this date.

Note: More and more double taxation agreements are currently being amended to give special consideration to home office days. In individual cases, it should therefore be carefully checked where the right of taxation lies.

What is tax-free wages under DBA/ATE?

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Field help

Explanation of the type of special case

Provide a brief description of your employment abroad here. The information should include:

  • Type of work (e.g. teaching at a state university)
  • Employer (e.g. “University of Sydney – state institution“)
  • Country and period of employment
  • if applicable, reference to the applicable DTA

Example: Teaching at the state University of Sydney (Australia) from 01.01.2025 to 31.12.2025. Wages from public funds, tax-free under the Germany–Australia DTA.

Amount of tax-free wages under DTA

Enter the gross salary you received abroad that is tax-free in Germany under a double taxation agreement.

This amount may only be entered if:

  • the salary was taxed abroad or
  • comes from a public fund of the foreign state, and
  • the DTA with this state explicitly provides for tax exemption in Germany.
Income-related expenses

Enter any work-related expenses incurred in connection with your employment abroad (e.g. travel expenses, professional literature, work equipment).

Note: Work-related expenses can also be claimed for tax-free income, provided they are directly related to the employment abroad.

However, they can only be taken into account for tax purposes if they have not already been deducted abroad.

Nationality

Enter your nationality or multiple nationalities here.

This information is relevant because some DBAs may link certain tax benefits to nationality.