The Two Pillars of German Tax Liability
To legally escape Germany's "unlimited tax liability" (meaning they can tax your worldwide income), you must eliminate two key things: your domicile (Wohnsitz) and your ordinary residence (gewöhnlicher Aufenthalt). You must satisfy both conditions.
Pillar 1: Ordinary Residence (gewöhnlicher Aufenthalt) & The 183-Day Rule
This is the most well-known rule and the easiest to understand. You establish an "ordinary residence" in Germany if you are physically present in the country for more than 183 days in a single calendar year.
The rule is brutally simple: if you cross this threshold, even by one day, you are considered a tax resident for the entire calendar year, and your worldwide income for that year becomes subject to German taxation. This applies to everyone, whether you're an employee, a freelancer, or an entrepreneur running a foreign company like a US LLC, provided your business activities aren't physically performed in Germany.
Pillar 2: Domicile (Wohnsitz) & The 'Center of Vital Interests' Trap
Here's where many nomads get into trouble. Staying under 183 days is not enough. You must also prove that you do not have a domicile (Wohnsitz) in Germany. A Wohnsitz exists if you maintain a home or apartment that is available to you at any time.
This is broader than just owning or renting a property. It can include:
A room in your parents' or a friend's house: If you have your own key and can access the space whenever you wish, the tax office can argue it's your domicile.
Personal belongings: Storing significant personal items in that room strengthens the tax office's case. The famous case involving tennis star Boris Becker cited a toothbrush as part of the evidence that he maintained a domicile in Germany despite claiming residency elsewhere.
To successfully escape German tax liability, you must metaphorically "burn all bridges." This means officially deregistering, giving up your apartment, and ensuring you don't have a space that could be considered your permanent base.
Common Scenarios & Pitfalls for Digital Nomads
Navigating the rules requires careful planning. Here are some common situations and how they affect your tax status:
Visiting Family and Friends
The Risk: Staying in your old bedroom, to which you still have a key. This is a classic indicator of a Wohnsitz.
The Solution: When you visit, stay in a guest room. Don't keep a key to the house or a specific room that is considered "yours." Your visits should feel like you're a guest, not a returning resident.
Storing Your Belongings
The Risk: Leaving boxes of personal items, furniture, or a car in a relative's garage or basement.
The Solution: Use a professional, third-party self-storage facility. This creates a clear commercial relationship and is generally considered harmless by tax authorities.
German Bank Accounts & Contracts
Good News: Merely holding a personal or business bank account, insurance policy, or phone contract in Germany does not create a domicile or ordinary residence. These are generally safe to maintain.
The "One Day Registration" Trap
The Risk: You've successfully deregistered, but you briefly re-register for a few days to open a specific bank account or renew a driver's license before deregistering again.
This is extremely dangerous. If you establish a legal residence for even one day in a calendar year, German tax authorities can claim you were a tax resident for the entire year, taxing your global income accordingly. Avoid this at all costs.
Proving Your Status: The Burden of Proof is on You
If the German tax office (Finanzamt) questions your status, the burden is on you to prove you were not a resident. You must be able to document your life outside Germany. Meticulous record-keeping is non-negotiable.
Travel Records: Keep all flight tickets, train receipts, and bus tickets.
Passport Stamps: Official entry and exit stamps are powerful evidence.
Accommodation Records: Save hotel invoices, short-term rental agreements (like Airbnb), and proof of rent payments in other countries.
Financial Statements: Credit card statements showing transactions in other countries can help build a timeline of your location.
Cautionary Tales: When It Goes Wrong
The Globetrotter Case: A German individual traveled the world for years, never staying more than 183 days in any single country. However, he kept his apartment in Germany. The court ruled that the apartment was his domicile (Wohnsitz), making him fully liable for German taxes on his worldwide income.
The Pilot Case: A pilot officially deregistered from Germany but was found to be maintaining his life there in secret. The authorities deemed the deregistration a sham, resulting in full, unlimited tax liability.
These cases show that the authorities are serious. Attempts to circumvent the rules, rather than follow them precisely, will likely end in failure.
