Living in Germany, working abroad – or vice versa. In times of increasing digitalization and flexibilization of numerous activities, more and more employees and entrepreneurs work worldwide. In many cases, there is even a frequent change of residence, which leads to tax issues especially for digital nomads.
An important rule here is the so-called tie-breaker rule. It is found in many double taxation agreements (DTAs) and regulates which state is entitled to taxation in individual cases. The tie-breaker rule is used in cases of a so-called double residence.
Principle 1: Tax residency under national and international law
The tie-breaker rule applies in cases of multiple residence within the meaning of the DTA or national law. Whether or not a person is resident in a country is in principle determined by the applicable national rules. In Germany, for example, according to § 1 (1) no. 1 EStG, an unlimited taxable person who maintains a residence or habitual residence in Germany is:
This article does not replace tax or legal advice in an individual case. Facts, current law, jurisdiction, documentation and implementation remain decisive.