Influencers in Dubai who previously worked in Germany can expect tax relief in their new home country. However, this only applies if they are not taxable anywhere else. But in some cases, there may still be a tax liability in this country. This is the case if influencers, for example, generate income through real estate ownership in Germany. But even in the presence of other economic interests in Germany, an extended limited tax liability in Germany may apply. In addition, moving to Dubai can lead to taxation in Germany. On the one hand, this occurs through the departure of shareholders of an influencer GmbH, whereby there are also solutions for this. However, individual entrepreneurs or shareholders of a partnership can also be subject to special taxation if a relocation of functions occurs. The double taxation agreement with the United Arab Emirates is usually of little importance for German influencers in Dubai because it is based on citizenship.

In Germany, there is a large number of influencers who practice their activities with increasing success. Of course, this is usually accompanied by a current financial profit. Consequently, the Treasury also participates in it. Therefore, the next link in this causal chain is the search for a way to avoid the comparatively high taxation in Germany. Therefore, more and more influencers are playing with the idea of leaving Germany in order to work from abroad in the future. A particularly interesting location in this context is the United Arab Emirates. Especially in Dubai, more and more influencers feel comfortable. Apart from a 5 % turnover tax, there is no other tax.

However, there may be circumstances that continue to tie an influencer in Dubai, despite moving there, to Germany for tax purposes. Therefore, a comprehensive and detailed preparation in advance of the departure is recommended. In this article, we deal with the factors that can bring about a continued German taxation of influencers in Dubai. In addition, we also inform about circumstances that can trigger taxation in Germany by moving there. In doing so, we proceed in such a way that we first illuminate the aspects that can lead to a tax when moving to Dubai first, and then see what further tax effects could be added in relation to Germany on influencers in Dubai.

We start our remarks on German taxes that influencers in Dubai could be subject to with a quite often relevant aspect. The question is whether influencers can continue to be taxable in Germany despite moving abroad. In fact, this may well be the case. The question of residence or habitual residence in Germany must be clarified. If this is the case, Germany retains the right to tax even if influencers should also be based in Dubai.

Let us now clarify briefly under which circumstances an unlimited tax liability could also exist after moving abroad in Germany. On the one hand, this is determined by the term residence. A residence means any living space to which you can continue to gain unrestricted access in Germany, while at the same time living as an influencer in Dubai. This can even simply be an independent guest room, for example with family members or acquaintances, for whom you receive a separate key. Whether you are registered with the local registration office does not matter.

Furthermore, it is important that you do not have any personal reasons that lead to you locating the center of life in Germany. If, for example, an influencer in Dubai leaves his family in Germany to work in Dubai, then the financial administration in Germany can still assume an unlimited tax liability in this country.

The third point that influencers in Dubai must consider about unlimited tax liability in Germany relates to the length of stay in Germany. Thus, the occasional stay in Germany is not a sufficient reason to recognize an unlimited tax liability. However, if you stay in Germany more than 183 days a year, the tax office sees it as the basis for accepting an unlimited tax liability – but often even for significantly shorter stays. However, it also depends on the accompanying circumstances, so that one should not make a blanket statement with fixed parameters.

However, in addition to an unlimited tax liability, a limited tax liability in Germany can also apply to influencers in Dubai. This is especially true if you draw income from real estate located in Germany. Because in such situations, the taxation right lies with the state in which the property is located. But in addition to this example, there may also be many other incomes that lead to a limited tax liability in Germany.

Now we come to another special case. If an influencer is active in Germany within the framework of its own capital company and now wants to move to Dubai, then this is subject to the exit taxation according to § 6 AStG. This corporation is usually a GmbH. On this subject, we have already published a large number of contributions, for example on how to avoid the exit tax, so in this article we will focus only on some general contexts and their impact.

The legislature in Germany sees a need for tax action if such a shareholder moves abroad. As soon as a taxpayer completely terminates his residence in this country, the taxation of any profit made later on from the sale of the GmbH shares abroad is due. In such a case, Germany would go out empty-handed, although otherwise it would have been entitled to a tax on the sale. For this logical reason, the tax administration carries out the taxation of a fictitious sales profit of the company, calculating the tax amount according to the statutory company valuation at the time of the departure.

Therefore, influencers who are involved in a GmbH or AG and are considering moving abroad should seek the advice of a tax consultant who is experienced in international tax law as early as possible in order to avoid a possible removal taxation in Germany.

Another important aspect that influencers in Dubai in particular should consider in order to avoid taxes in this country is the extended limited tax liability in Germany. This involves several conditions, namely, on the one hand, that a German citizen was unrestrictedly taxable in Germany for at least five years before moving abroad. In addition, the move to a low-tax country takes place while at the same time safeguarding essential economic interests in Germany.

We consider the situation for a German citizen with a correspondingly long-standing unlimited tax liability in Germany. Of course, influencers in Dubai definitely meet the criterion of low tax abroad, because there is no income tax. So as an influencer in Dubai, you have to make sure that you do not maintain any essential economic interests in Germany.

Well, what falls under these essential economic interests in Germany? On the one hand, this is all income that has no relation to foreign countries. It may sound a little strange here, but there are actually incomes that are neither domestic nor foreign. These neutral incomes include interest income from a German bank or private sales transactions of Bitcoins or other cryptocurrencies. Therefore, such income also falls among those subject to the extended limited tax liability. Therefore, only those incomes that are clearly foreign income are protected from extended limited tax liability.

Essential economic interests in Germany are thus all other income and assets in this country. A more detailed list of domestic income is provided by § 49 EStG and of foreign income § 34d EStG. But basically this is mainly about all income, which also serves in Germany as a taxable source of income.

There is an allowance of EUR 16,500. Only if the annual income, which is not foreign, but which is subject to the extended limited tax liability exceeds this amount, you tax the exceeding amount in Germany.

Furthermore, the extended limited tax liability applies temporarily. The period begins after the end of the year of departure to a low-tax country and ends ten years later. Incidentally, this also applies if you first move to another country with an effective tax rate of at least 66% of the comparable German value, so that you remain exempt from the extended limited tax liability in Germany, and later move from there to another country, where the tax level is lower. In this regard, we must also note that the precise definition of § 2 AStG on the concept of low taxation is much more complex than we can present here briefly, while respecting the framework of this contribution.

The penultimate item on our agenda concerns the tax implications that influencers in Dubai have to expect when they transfer certain areas of their business to Dubai in Germany. This operational activity or task is called a function under tax law. If they continue to use their company in Germany after moving to Dubai, for example to have content processed by employees there, but later want to process these tasks on site in Dubai, then this is accompanied by a transfer of the corresponding activity abroad. This process thus represents a relocation of functions abroad.

A relocation of functions leads to a loss of control substrate in Germany. Because the relocation of a function abroad also reduces the potential of the company based in Germany to generate tax revenue locally. For this reason, the legislature also introduced a taxation in Germany in the case of relocations of functions, which corresponds in some way to an exit taxation.

In the tax assessment of this relocation of functions, the opportunities and risks of the relocated function that are directly or indirectly linked to economic success should be considered. This also applies to so-called other advantages that may be inherent in a function. For example, intangible assets or the goodwill as well as sales risks are among the opportunities and risks and the shift of expertise to other benefits. A whole series of different forms of functional relocations can be distinguished. However, a more detailed consideration of all variants is outside the focus of this article.

Finally, another information for influencers in Dubai. Perhaps one or the other reader has noticed it, but so far we have never referred to a double taxation agreement between Germany and the United Arab Emirates in our article. So one might wonder if there is no such agreement?

In fact, such a double taxation agreement exists, but this applies only to citizens of the United Arab Emirates. German nationals therefore have no corresponding protection against double taxation in both countries. But because most of our readers do not have citizenship of the United Arab Emirates, we have also so far waived the inclusion of these regulations in our article. But the double taxation agreement could be quite relevant for influencers in Dubai if they decide to naturalize.