Do I need to file a German return if my employer already withheld tax?
Withholding on the payslip is a payment on account, not a substitute for an assessment in every case. A return is often worth filing even where it is not compulsory, because deductions and allowances that payroll could not take into account are only given on assessment. For Canadian purposes there is a second reason. The Canadian credit is claimed for the German income tax finally borne, and the assessment is the document that establishes what that was. A year settled by withholding alone leaves the credit resting on payslips, which is a weaker file if the claim is ever reviewed.
What do I still file in Canada while I am on assignment in Germany?
If your Canadian residence continues, a full Canadian return reporting world income, the German employment income included, with a credit claimed for German income tax on it. Alongside it come the obligations that have nothing to do with tax being payable. Canada's foreign property reporting can be triggered by accounts and investments accumulated during the assignment, and it applies on the cost of what you hold rather than on any income it produces. If your residence ended instead, the Canadian filing narrows to Canadian-source income, but the year it ended still needs a return that closes the residence and carries the departure computation.
Which German documents does a Canadian preparer actually need?
Three documents, in order of usefulness. The German assessment for the year, because it establishes the income tax finally borne. The annual wage statement from the employer, which separates the wage tax and its surcharge from social insurance contributions. And the payslips, which are what you fall back on when the first two are incomplete, or when the assignment straddles two Canadian years and the income has to be split by period. Collect them as the assignment runs. Requesting them afterwards, from a payroll provider you no longer deal with, is the slow and expensive route.
Do I have to report my German bank accounts to Canada?
Canadian residents report foreign property once the cost of what they hold crosses the reporting threshold, and the test is what the holdings cost rather than what they earn, so an account paying nothing can still be reportable. Bank balances, investment accounts and property held abroad are the usual items. What is included and what is excluded wants checking against the current rules each year rather than assumed from the first year you filed. Retirement arrangements are the item most often got wrong, because whether one sits inside or outside the reporting depends on what the arrangement actually is.
I am moving to Germany permanently — what is my last Canadian filing?
A return for the year you leave, reporting world income up to the date residence ended and Canadian-source income after it, and carrying the departure computation. Canada treats a departing resident as having disposed of much of what they own on the way out, which means assets have to be valued at that date whether or not anything is payable. After that year, Canadian filing is limited to Canadian-source income and the German arrival position takes over. Because both countries run on the calendar year, the two periods abut cleanly, which is one problem this particular corridor does not have.
What if my German assessment arrives after I have filed in Canada?
That is a common sequence rather than a problem, provided it is handled. The Canadian return is filed on a supportable figure for the German tax, normally taken from the annual wage statement, and the credit is revisited when the assessment arrives. If the assessed German tax differs, the Canadian claim is adjusted for that year. What matters is that the original claim was computed on a documented basis, and that the adjustment is actually made rather than left to be discovered later. Keep the workings for the provisional figure with the return. They are what explains the later change.
Which countries have a tax treaty with the United States?
Around sixty, including Canada, the United Kingdom, India, Australia and most of western Europe — but the list matters less than the terms, because each treaty caps rates and allocates income differently. Two countries with treaties can produce opposite answers on the same pension or the same royalty. What decides your position is the specific article covering your income type. See our country guides.
Which country do I pay tax to first?
Generally the source country — where the income arises — taxes first, often by withholding before you receive it. Your country of residence then taxes the same income and credits what the source country took. That order is why timing matters: a residence-country return filed before the source-country tax is settled has nothing to credit yet. Getting the sequence right is most of the work. See international tax planning.
