I have to file my tax return for 2004.For 2004 I worked in Germany only for 9 months and for the rest of the period in Singapore.I understand that Income earned out of Germany for a year is used to calculate progressive tax rate.But on the contary my findings says that this way a person is taxed twice.To explain this I take an example.
Say a person workes in Germany for 9 months and earns 41500 Euro
Tax on this : 4796 at about 18.5% rate

Now If We consider income outside Germany(Say 5000 Euro)
Net gross income for 2004 = 41500 + 5000 = 46500 Euro and tax rate for this
Gross amount = 19.71 and tax = Euro 6176.


So basically the tax rate has moved form 18.5 to 19.71 and that cost the person about
5000* 19% about 1000 Euro as additional tax.Isn't this double taxation.For the 5000 earned out of Germany the person has already paid tax in Singapore about 800 euro and again he or she is getting taxed in Germany.In my opinion its simply DOUBLE TAX!!!

Although it appeares that income earned away from Germany is used to calculate tax rate on global income in reality its DOUBLE TAXATION.
Any expert comments.

Hi,

it is not, but it is.

http://www.praktisches-wissen.de/verlage/vds/aktuell/akt033.html
http://bundesrecht.juris.de/bundesrecht/estg/__1.html
http://www.steuernetz.de/content/ste2004/mantel/pflicht.html

regards,
-a

Hi,

I didn"t check the links posted by aalvarez, my understading is that it works as follows:
Your income for the 3 months you were in Singap. are used to determine what accumulative tax percentage you should have, then this percentage will be applied to only what you have earned in Germany.
In this way you will not pay tax twice.

In fact I had a similar situation as yours but it was 6 months in my home country (Egypt), where the income is relatively lower than Germany. This resulted in getting back something like 3000 Euro from the 6 months tax I paid in Germany.

Regards,

W.

Hi wael,
Did u submit any proof for your income outside germany.

Priya

Hi priya,

Yes I submitted a letter from my previous company saying what salary did I get at the time of being their employee.
I believe that any salary slips would have done the same, I just didn't have any, I have been told that a letter will be fine.

W.