Working abroad and paying taxes in Germany
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If you are self-employed, you have the freedom to determine your own place of work. That’s why many self-employed people move to warmer climates during the German winter, from where they pursue their activities digitally – so-called digital nomads.
However, there are a few tax regulations to consider when working this way, so that your workation doesn’t turn into a tax nightmare.
The digital nomad life
Being a digital nomad and working abroad is a big dream for many self-employed people. Working online makes it very easy to realize this freedom, especially since you don’t necessarily have to rent an office and don’t have fixed working hours. You can literally work wherever and whenever you want – as long as you have an internet connection!
However, you cannot exploit this freedom indefinitely. If you are registered for tax purposes in Germany and still have your official place of residence in Germany, you have to pay your taxes here as well. And in order not to lose your tax status, you should know the general conditions for self-employed work abroad.
Paying taxes: It all depends on where you live
Generally speaking, you are free to be registered for tax purposes in Germany and to carry out your self-employed work in another location of your choice. For example, you can be registered with the tax office in Berlin, but live in Portugal during the winter and work from there. You continue to pay your taxes in Germany as usual.
But if your center of life moves abroad and is no longer in Germany, your tax liability may change. In principle, you have to pay tax on your income where you are resident – i.e. where you are officially registered.
A decisive criterion for determining your place of residence is where you spend most of your time within a year. If you are abroad for more than 6 months of a year, you may be subject to additional tax liability. This is especially risky if the country you are staying in does not have a tax treaty with Germany.
💡Tip from Accountable: This is also referred to as the 183-day rule: if you stay outside of Germany for more than 183 days in a row, you are considered to no longer have your usual place of residence – or center of life – in Germany.
Health insurance abroad
As a self-employed person you have to take care of your health insurance on your own. However, your health insurance usually only works for medical issues occurring within Germany. This means that you should inform yourself in advance about a possible travel health insurance for a longer stay abroad.
Nice to know: If you are with a public health insurance company, you can apply for a European Health Insurance Card (EHIC), which enables you to receive medical care within the member states of the European Union.
When traveling outside the EU, however, you should always take out appropriate travel health insurance.
➡️ A guide to insurance for freelancers in Germany
Working from abroad: do I have to inform my clients?
No! You are not required to tell your clients where you are staying or working from.
Deducting expenses from abroad
If you have to travel abroad due to business, you have the option of claiming and deducting the costs incurred in your tax return. This applies, for example, to travel or food expenses.
➡️ 7 handy tax deductions for freelancers in Germany
But in order to deduct these costs, you must not only justify them on a professional basis, but also be able to substantiate them. You must therefore keep all relevant receipts and invoices in order to be able to present them to the tax office upon request.
💡Tip from Accountable: The simple receipt recognition in the Accountable app allows you to quickly upload all your expenses and income via photo and thus always have an overview of your cash flow. Your expenses are also automatically categorized for tax purposes, making it a lot easier for you to fill out your tax return.