www.stburbahns.de
Content
Content Slight - Page
Introduction 3 - 5
I. Crew Members with tax residence in
Germany
No tax treaty applicable 7 ...
Introduction (1)
Distinction: Resident/ non-resident
-> A person with permanent home (‘Wohnsitz’ = having an
rented apartm...
Introduction (2)
Distinction: German source income
->Ships under German flag do belong to German territory for
tax purpose...
Introduction (3)
Distinction: None-Residents > German source income
-> Airplanes outside German airspace and airports do n...
I.
Crew members with tax
residence in Germany
www.stburbahns.de
NO Tax Treaty Applicable:
Crew members with tax residence in Germany (1)
-> Residents of Germany (all nationalities) are t...
NO Tax Treaty Applicable:
Crew members with tax residence in Germany (2)
Ship-Cook Decision - Lower Tax Court of Baden Wür...
Tax Treaty Applicable:
Crew members with tax residence in Germany (1)
-> Residents of Germany -> basically taxable in Germ...
Tax Treaty Applicable:
Crew members with tax residence in Germany (2)
-> Even when Germany should not have taxation rights...
Tax Treaty Applicable:
Crew members with tax residence in Germany (3)
->Example: German ship-captain hired by shipping com...
Tax Treaty Applicable:
Crew members with tax residence in Germany (4)
-> Many Pitfalls: interpretation of tax treaty requi...
II.
Crew members without tax
residence in Germany
www.stburbahns.de
NO Tax Treaty Applicable:
Crew members without tax residency in Germany (1)
-> Taxable is salary only insofar as derived f...
NO Tax Treaty Applicable:
Crew members without tax residency in Germany (2)
-> Example: A captain (a German national but w...
NO Tax Treaty Applicable:
Crew members without tax residency in Germany (5)
-> Since 2007: Sec. 49 (1) No. 4e Income Tax C...
NO Tax Treaty Applicable:
Crew members without tax residency in Germany (5)
-> Example: A flight-captain (a German nationa...
Tax Treaty applicable:
Crew members without tax residency in Germany (1)
-> Treaty Protection: Bilateral tax treaties simi...
Tax Treaty applicable:
Crew members without tax residency in Germany (2)
-> Example: A captain (a German national but with...
www.stburbahns.de
Further more detailed
information compare:
Booklet in German:
„Zur Besteuerung von Bordpersonal an Bord
...
Impressum
Der Kanzleiinhaber ist Mitglied in der Steuerberaterkammer Hamburg, Raboisen 32, 20095 Hamburg. Die gesetzliche
...
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Flight and ship crews in international transport 2010

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Taxation Germany: Flight and ship crews in international transport

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Flight and ship crews in international transport 2010

  1. 1. www.stburbahns.de
  2. 2. Content Content Slight - Page Introduction 3 - 5 I. Crew Members with tax residence in Germany No tax treaty applicable 7 - 8 TaxTreaty applicable 9 - 11 II. Crew Members without tax residence in Germany No tax treaty applicable 14 - 17 TaxTreaty applicable 18 - 19 Important Notice: Laws, regulations, administrative instructions, tax treaties and court decisions could deviate from each other and are subject to permanent changes. The judgement of a case depends on individual facts and circumstances so that it is strongly recommended to contact a tax advisor before making a decision that affects one's tax situation. This presentation is only intended providing an overview and can not substitute individual advice.
  3. 3. Introduction (1) Distinction: Resident/ non-resident -> A person with permanent home (‘Wohnsitz’ = having an rented apartment or similar available in Germany) or habitual abode (‘gewöhlicher Aufenthalt’ = physically staying longer periods in Germany) in Germany is fully taxable in Germany with his world wide income (=> compare with tax residence in Germany = ‘unbeschränkte Steuerpflicht’). -> Without such residency in Germany a person is only liable to tax in Germany with certain sources of income from German territory (=> compare without tax residence = ‘beschränkte Steuerpflicht’) -> important ships/ airplane and territory see next slight -> Nationality of individual usually not important www.stburbahns.de
  4. 4. Introduction (2) Distinction: German source income ->Ships under German flag do belong to German territory for tax purposes as long as they are within German territory (incl. 12-sm-zone) or in high seas belonging to no state; ships are not deemed German (tax) territory in case they are operating in territorial sea of an foreign state. In contrast: Ships under foreign flags are only deemed German (tax) territory while operating in German territory. ->German territory: Continental waters, harbors and territorial sea (12-sm-zone). Special rules possible for certain activities on continental shelf/ exclusive economic zone. www.stburbahns.de
  5. 5. Introduction (3) Distinction: None-Residents > German source income -> Airplanes outside German airspace and airports do not belong to German territory. Flag of airplane not decisive -> (FTC decision of 14 Dec 1988, I R 148/87, BStBl 1989 II, 319). The-Seaman-Decision - Fe d e ra l Ta x C o u r t d e c i s i o n a s o f 2 7 J u l y 1 9 6 2 , V I 1 5 6 / 5 9 U , B S t B l 1 9 6 2 I I I , p 4 2 9 - c o n c e r n i n g a s a i l o r w i t h o u t p e r m a n e n t h o m e a v a i l a b l e t o h i m i n G e r m a ny w h i l e o n b o a r d o f a s h i p : ‘ W h e r e a G e r m a n s e a m a n i s r e s i d i n g o u t s i d e G e r m a ny fo r a p e r i o d o f m o r e t h a n 6 m o n t h s i t c a n b e a s s u m e d , t h a t t h e s a i l o r h a s n o l o n g e r a n h a b i t u a l a b o d e i n G e r m a ny. W h e r e a s e a m a n i s r e s i d i n g o u t s i d e G e r m a n t e r r i t o r y fo r m o r e t h a n o n e y e a r, a n h a b i t u a l a b o d e i n G e r m a ny c a n o n l y b e a s s u m e d i n e xc e p t i o n a l c a s e s .’ www.stburbahns.de
  6. 6. I. Crew members with tax residence in Germany www.stburbahns.de
  7. 7. NO Tax Treaty Applicable: Crew members with tax residence in Germany (1) -> Residents of Germany (all nationalities) are taxable in Germany with their world wide income! Included are salaries earned on board of a ship or aircraft in international transport regardless where it was operated (flag not important while taxed on world wide income basis and if no tax treaty protection available). Credit for foreign tax paid possible (if any) under rules of unilateral credit method (Sec. 34c & 34d Income Tax Code). -> Obligation to file income tax return in Germany! -> Typical situations: Working for shipping companies resident in Guernsey, Panama, Bahamas, Marshall Islands, Antigua and Barbuda. Usually no tax payable in these jurisdictions. www.stburbahns.de
  8. 8. NO Tax Treaty Applicable: Crew members with tax residence in Germany (2) Ship-Cook Decision - Lower Tax Court of Baden Württemberg of 22 July 2008, 4 K 1296/08 - German cook hired by US company under law of Bermuda on cruising ships under Bermudian flag; lived on board and only returned for short periods to Germany in-between different assignments; received net payment on board of ship in cash. Decision: Still resident of Germany as permanent home was at all times available in Germany (core issue!) -> No tax treaty applicable, neither UK nor USA -> Ergo: no tax treaty protection possible. -> Taxable with world wide income in Germany; not decisive that no German employer liable for salary tax withholding procedure. Conclusion: If a home in Germany is unavoidable, e.g. family staying at home while working abroad on board of ship, mind your tax obligations! If German tax residency (permanent home or habitual abode) is avoided see further under section ‘without tax residency’ for tax consequences. www.stburbahns.de
  9. 9. Tax Treaty Applicable: Crew members with tax residence in Germany (1) -> Residents of Germany -> basically taxable in Germany with world wide income! -> thus included are - in principal - salaries earned on board of a ship or aircraft in international transport. -> check treaty protection: Bilateral tax treaties similar to article 15 (3) OECD Model Convention “remuneration derived in respect of an employment exercised aboard a ship or aircraft operated in international traffic (…), may be taxed in the (. . .) state in which the place of effective management of the enterprise is situated.” -> In other words: If an shipping company or airline has its place of effective management outside Germany, Germany may (but not necessarily will) be restricted to tax this salary. Note: The application of this general rule depends from individual facts and circumstances and the interpretation and wording of the requirements of article 15 (3) OECD Model Convention (-> difficulty to make general statement). Moreover bilateral tax treaties may apply different rules or wording (e.g. US 2008, UK 2010, Netherlands 2012 etc.)! www.stburbahns.de
  10. 10. Tax Treaty Applicable: Crew members with tax residence in Germany (2) -> Even when Germany should not have taxation rights on first sight according to a tax treaty Germany may tax the salary according to national subject to tax clauses (Sec 50d (8) and (9) Income Tax Code). In other words: Where the salary or part of it is not taxed in the state of the shipping company (and several other requirements are fulfilled) Germany may apply national treaty override rules (not clarified yet if unconstitutional, compare last case FTC decision of 20.08.2014, I R 86/13, constitutional court decision pending under BvL 21/14). -> If taxed in Germany: credit for foreign tax (if any) paid possible under rules of unilateral credit method (Sec. 34c & 34d Income Tax Code); -> Obligation to file income tax return in Germany! www.stburbahns.de
  11. 11. Tax Treaty Applicable: Crew members with tax residence in Germany (3) ->Example: German ship-captain hired by shipping company with effective place of management in foreign jurisdiction working on ship for that company in international transport. -> Taxable in Germany but Germany may be restricted to tax salary of captain due to tax treaty as taxation right granted to foreign state where shipping company (employer) has its place of effective management. -> but: see next slight. www.stburbahns.de
  12. 12. Tax Treaty Applicable: Crew members with tax residence in Germany (4) -> Many Pitfalls: interpretation of tax treaty requirements, triangular cases, differences in wording of bilateral tax treaties, hiring-out-of-labor cases (very problematic!?), tax exemption or credit method as per tax treaty; subject-to- tax clauses unilateral as well as per tax treaty etc (should be checked based on individual facts and circumstances). -> One very critical issue: If salary or parts of it is not taxed in jurisdiction of shipping company -> Germany may retain its taxation rights -> unilateral (or today also bilateral) subject to tax clauses -> disputed -> positive.: new Cyprus Tax Treaty 2011 ? Liberia Tax Treaty 1970 if more than 183 day rule applicable. www.stburbahns.de
  13. 13. II. Crew members without tax residence in Germany www.stburbahns.de
  14. 14. NO Tax Treaty Applicable: Crew members without tax residency in Germany (1) -> Taxable is salary only insofar as derived from German sources as defined in Sec. 49 German Income Tax Code. -> exercised in Germany, i.e. in German territory (Sec. 49 (1) 4 a) -> ship & flight crews -> exercised on board of an airplane in international traffic belonging to an enterprise with place of effective management in Germany (Sec. 49 (1) 4e) -> For salaries: Taxable as far as an employment was exercised on or in German territory. Likely therefore only an proportional amount of the salary of crew members in international traffic, i.e. when on German territory (ship with other flag, airplane) or in German or international territory (when ship under German flag); if necessary on an estimated basis, i.e. that portion earned within German territory while working on board of ship or airplane. -> Usually no obligation to submit tax return, i.e. salary tax becoming final but certain exceptions possible. -> Possible right to reclaim unlawful deductions -> FTC decision of 21 Oct. 2009, I R 70/08 www.stburbahns.de
  15. 15. NO Tax Treaty Applicable: Crew members without tax residency in Germany (2) -> Example: A captain (a German national but without residence in Germany) works for a German shipping company on board of an ship under foreign flag in international traffic (completely outside German territory ) -> the salary is not taxable in Germany. -> Example: A captain (a German national but without residence in Germany) works for a German shipping company on board of an ship under foreign flag in international traffic (including German territory) -> the salary is not taxable in Germany except the (estimated) portion exercised on German territory; the German shipping company will need to deduct proportional German salary taxes. -> Example: A ship-engineer (a foreign national without residence in Germany) works for a German shipping company on board of an ship under foreign flag in international traffic outside German territory -> the salary is not taxable in Germany. -> Example: A ship-engineer (a foreign national without residence in Germany) works for a German shipping company on board of an ship under German flag in international traffic including German territory and in international sea -> the salary is only taxable as far as earned on German territory or in international sea; the German shipping company will need to deduct proportional German salary taxes. www.stburbahns.de
  16. 16. NO Tax Treaty Applicable: Crew members without tax residency in Germany (5) -> Since 2007: Sec. 49 (1) No. 4e Income Tax Code contains a special rule for crew members on board of an airplane in international traffic where the airline has its place of effective management in Germany as those salaries are fully taxable in Germany. Note: This rule does not apply for shipping crews! -> Compare Federal Notice of 19.04.2006, Schr. Betr. Beschränkte Steuerpflicht von Bordpersonal inländischer Fluggesellschaften; Bericht der Bundesregierung; introduced to combat increasing number of German flight crews taking residency outside Germany to avoid German taxation). www.stburbahns.de
  17. 17. NO Tax Treaty Applicable: Crew members without tax residency in Germany (5) -> Example: A flight-captain (a German national but without residence in Germany) works for a German airline on board of an airplane in international traffic (completely outside German territory)-> the salary is since 2007 taxable in Germany. -> Example: A flight attendant (a German national but without residence in Germany) works for a foreign airline on board of an airplane in international traffic outside German territory -> the salary is not taxable in Germany because the place of effective management of the airline is not in Germany. -> Example: A flight-captain (a German national but without residence in Germany) works for a foreign airline on board of an airplane in international traffic (including starts and departures from German territory) -> the salary is not taxable in Germany except the (estimated) portion exercised on German territory. Existence of German employer? -> usually no tax filing obligation. www.stburbahns.de
  18. 18. Tax Treaty applicable: Crew members without tax residency in Germany (1) -> Treaty Protection: Bilateral tax treaties similar to article 15 (3) OECD Model Convention “remuneration derived in respect of an employment exercised aboard a ship or aircraft operated in international traffic (…), may be taxed in the (. . .) state in which the place of effective management of the enterprise is situated.” In other words: If an shipping company or airline has its place of effective management outside Germany, Germany likely being restricted to tax this salary. Note: The application of this general rule depends from the individual facts and circumstances and the interpretation and wording of the requirements of article 15 (3) OECD Model Convention (-> difficulty to make general statement). Moreover many bilateral tax treaties may apply different rules or wording (US 2008, UK 2010, Netherlands 2012 etc.)! www.stburbahns.de
  19. 19. Tax Treaty applicable: Crew members without tax residency in Germany (2) -> Example: A captain (a German national but without residence in Germany) works for a foreign airline on board of an airplane in international traffic (including starts and departures from German territory) -> the salary is not taxable in Germany but in the state where the airline has its place of its effective management, at least where rules similar to article 15 (3) OECD MC apply -> possibly also case of article 15 (1) OECD MC > residency state taxation rule. -> Example: A flight-captain (a German national but without residence in Germany) works for a German airline with place of effective management in Germany on board of an airplane in international traffic (completely outside German territory)-> the salary is since 2007 taxable in Germany (assumption is that Germany has also taxation right according to tax treaty article 15(3) OECD-MC)! www.stburbahns.de
  20. 20. www.stburbahns.de Further more detailed information compare: Booklet in German: „Zur Besteuerung von Bordpersonal an Bord von Schiffen und Flugzeugen im internationalenVerkehr 2015.“ www.grin.de
  21. 21. Impressum Der Kanzleiinhaber ist Mitglied in der Steuerberaterkammer Hamburg, Raboisen 32, 20095 Hamburg. Die gesetzliche Berufsbezeichnung »Steuerberater« wurde in der Bundesrepublik Deutschland verliehen. Kanzleianschrift: Steuerberater Rüdiger Urbahns – Rahlstedter Str. 163 b -22143 Hamburg-Rahlstedt - Telefon: 040 71 66 47 60 -Fax: 040 301 87 429 E-Mail: rudiger.urbahns@stburbahns.de -USt-Id.-Nr: DE177626279 Der Berufstand des Steuerberaters unterliegt im Wesentlichen den nachstehenden berufsrechtlichen Regelungen: § Steuerberatungsgesetz (StBerG) § Durchführungsverordnung Berufsordnung (BOStB) § Steuerberatergebührenverordnung (StBGebV) Die o. a. Regelungen können in ihrer aktuellen Fassung jederzeit unter der Rubrik »Downloads« auf der Internetseite der Bundessteuerberaterkammer unter www.bstbk.de eingesehen werden. Die wesentlichen Merkmale der Dienstleistungen ergeben sich aus den § 32 und 33 des Steuerberatungsgesetzes. Die Preise für Steuerberatungsleistungen richten sich nach der Steuerberatergebührenverordnung. Auf Anfrage werden gerne nähere Auskünfte zu den Leistungen und den dafür anfallenden Gebühren erteilt. Im Übrigen sind die erforderlichen Angaben lt. Dienstleistungs- Informationspflichten-Verordnung (DL-InfoV) vom 12.03.2010 am Kanzlei-Standort zugänglich und einsehbar. Es besteht eine Vermögensschadenshaftpflichtversicherung im berufsrechtlich notwendigen Umfang bei der R+V Allgemeine Versicherung AG, Taunusstr. 1, 65193 Wiesbaden, vertreten durch die IAK GmbH, Horster Str. 26-28, 46236 Bottrop. Räumlicher Geltungsbereich: Europa einschließlich der Türkei und der Staaten auf dem Gebiet der ehemaligen Sowjetunion einschließlich Litauen, Lettland und Estland. Important Notice: The information provided in this publication is intended for general information purposes and cannot be considered as advice. An advisory relationship becomes binding only based on agreed and signed engagement letters. Note: Laws, regulations, administrative instructions, tax treaties and court decisions could deviate from each other and are subject to permanent changes. The judgement of a case depends on individual facts and circumstances so that it is strongly recommended to contact a tax advisor before making a decision that affects one's tax situation. Only applicable law is that of Germany. Status: Jan. 2015 www.stburbahns.de

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