Income tax law distinguishes between unlimited and limited tax liability.
If you are a natural person with a domicile or habitual residence in Germany, you are subject to unlimited income tax liability. You must pay tax on your income from Germany and from abroad in Germany.
If you do not have a domicile or habitual residence in Germany but have earned certain domestic income, you are subject to limited income tax liability. Under certain conditions, you can apply for unlimited tax liability. If you are a German citizen, have been posted abroad and have earned income from a public-law employment relationship in Germany, you can be treated as liable to unlimited income tax. In addition, you may be treated as subject to unlimited income tax liability if you earn certain domestic income and at least 90% of all income is subject to German income tax or the income not subject to German income tax does not exceed the basic allowance in a calendar year.
Legal basis
- § 1 Income Tax Act (EStG)
- § 49 EStG