International assignment of employees from Germany to a foreign country
Plan international assignments of employees early, in order to avoid double taxation
International assignments of employees from Germany to a foreign country should be planned in advance. The implications of an international assignment with reference to the tax law and the social security law in the native country and in the country to which the employee is to be assigned internationally, need to be checked. If necessary, applications must be filed such as form A1 – or the employer may have to get a registration according to AÜG (= law on temporary employment) for leasing out employees. In order to avoid double taxation, it needs to be checked in advance which country (Germany or the native country) is entitled to tax the German income and if there may be double taxation of the income. The employee will be generally compensated for any additional tax liability. Therefore, the advance calculations need to be made.
Tax filing in native country? It can make sense – but has to be checked
If it is planned that employees are to be permanently transferred, it must be checked whether the employee still has to file tax declarations in their native country and whether he/she can de-register for tax purposes in his/her native country. Agreements must be analyzed with respect to tax-related implications. The employee assigned internationally has to get an income tax assessment done in the country he/she is transferred to and register for tax purposes there. The employee needs a competent contact person, who speaks the local language and also corresponds with the certified tax advisor in the native country. In this and in similar cases, we can gladly act on behalf of the companies that want to internationally assign their employees or on behalf of the internationally assigned employees and recommend suitable experts abroad or clarify all questions directly from them for you.