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[philo]

I'm an American faculty member who has been invited to teach for a term in Germany. I'm still getting some clarification on what the compensation would be, but once I need to find this out I need to know how to calculate the after-tax income. There are online calculators for this, but I don't know how to take into account the German equivalent of the standard deduction. If I make €20,000 over 4 months, let's say, will the same portion of that be taxable as if I had been working in Germany the whole year and yet only made €20,000?

I'm not even sure that question makes sense, but hopefully someone here will also have done a temporary gig in Germany and can relate their experience.

[scampster]

I'm an American faculty member who has been invited to teach for a term in Germany. I'm still getting some clarification on what the compensation would be, but once I need to find this out I need to know how to calculate the after-tax income. There are online calculators for this, but I don't know how to take into account the German equivalent of the standard deduction. If I make €20,000 over 4 months, let's say, will the same portion of that be taxable as if I had been working in Germany the whole year and yet only made €20,000?

I'm not even sure that question makes sense, but hopefully someone here will also have done a temporary gig in Germany and can relate their experience.

Are you in touch with the HR people at the university? They told me what I could expect my after tax income to be (including a breakdown such as contribution to the pension, which I get back when I leave the country).

[philo]

Not yet; I've just been corresponding to the faculty member who issued the invitation. But he's just written to say that he is going to get in touch with someone else. He also raised the possibility of my getting paid through my university and then his university transferring them money, which might be feasible.

[cs_prof]

Germany and the USA have signed the income tax treaty in 1989. This ensures that double taxation is eliminated. If you are over taxed, this can be rectified by filing tax returns in both countries in the beginning of the next tax year. You will get reimbursed from both countries if you had over paid. Also keep in mind that for tax purposes, you are still a U.S. resident because you are going to stay abroad for less than six months. Presumably in Germany same six month limit exists. Anyway, double taxation should not be taking place; it would be prudent to talk to the payroll officer in the German university.   

Here is the link that might help: http://www.irs.gov/businesses/international/article/0,,id=169486,00.html 

[philo]

Germany and the USA have signed the income tax treaty in 1989. This ensures that double taxation is eliminated. If you are over taxed, this can be rectified by filing tax returns in both countries in the beginning of the next tax year. You will get reimbursed from both countries if you had over paid. Also keep in mind that for tax purposes, you are still a U.S. resident because you are going to stay abroad for less than six months. Presumably in Germany same six month limit exists. Anyway, double taxation should not be taking place; it would be prudent to talk to the payroll officer in the German university.   

Here is the link that might help: http://www.irs.gov/businesses/international/article/0,,id=169486,00.html 

Thanks for this. I knew that there would be no double taxation, but I assumed that I would be paying the higher German rate. Per article 20 of the treaty, though, which seems to cover the case exactly, I would be paying U.S. taxes. This is really helpful.

[parispundit]

Germany and the USA have signed the income tax treaty in 1989. This ensures that double taxation is eliminated. If you are over taxed, this can be rectified by filing tax returns in both countries in the beginning of the next tax year. You will get reimbursed from both countries if you had over paid. Also keep in mind that for tax purposes, you are still a U.S. resident because you are going to stay abroad for less than six months. Presumably in Germany same six month limit exists. Anyway, double taxation should not be taking place; it would be prudent to talk to the payroll officer in the German university.   

Here is the link that might help: http://www.irs.gov/businesses/international/article/0,,id=169486,00.html 

Thanks for this. I knew that there would be no double taxation, but I assumed that I would be paying the higher German rate. Per article 20 of the treaty, though, which seems to cover the case exactly, I would be paying U.S. taxes. This is really helpful.

Yes, and you will be eligible for enormous tax deductions as well. See if you can find a copy of the "Tax and Financial Guide for College Teachers". The last edition was in 2005, but this part hasn't changed.

[hulkhogan]

I have received money from Germany in the past (consulting fees, book royalties), and there is a way to petition to German Finance Ministry to be exempt from German income tax as a result of the double-taxation agreement. I did so and had no trouble with the tax people. You will have to declare your German income on your U.S. tax return for that year, though. If you're interested in this option, PM me, and I can see if I still have my old paperwork somewhere and can point you in the right direction on this. Otherwise, yes, the payroll people in Germany may know about this, but with their being German and all, it might take some finagling to get the help you need.

[gyfrinachgar]

Also keep in mind that for tax purposes, you are still a U.S. resident because you are going to stay abroad for less than six months. Presumably in Germany same six month limit exists.

No, Germany operates a 3 month rule. If you are staying longer, you are required to apply for a residence permit. I think you can apply any time during the first 3 months, but I am not enitrely sure - never did it myself in the end. In any case, this document seems to include some helpful stuff: http://www.uni-marburg.de/international-en/welcome-en/guide/chapter5.pdf