Do I file a German return if my US employer pays me?
Payroll location does not decide the filing. Germany looks at where you live and where the duties are performed, so if you are resident there, or working there, a German return is generally in point even though the money leaves a payroll abroad. The return in the other country continues alongside it, because a US person files on worldwide income wherever the employer sits. The usual answer is both, with the treaty deciding which country has the first claim on the employment income and which one gives relief. The practical work is agreeing the workday record that supports the split.
How are US stock options taxed if they vest in Germany?
Equity is the part of this corridor that goes wrong most often. A grant made in one country and vested in the other is not allocated to whichever country issued the paperwork; it is split by the workdays between grant and vest, so a share of the gain belongs to each country in proportion to where you were working over that period. That means keeping a day-by-day record for the whole vesting period, not only for the year of exercise. Both returns then report the same event on the same split, and the relief claim rests on that shared allocation.
Is my German pension reported on my US tax return?
Yes, and the harder question is what it is. Pension arrangements in this corridor have to be characterised under the specific treaty articles before anyone can say which country taxes the contributions, the growth inside the arrangement and the eventual payments. Different arrangements sit under different articles, and the answer is not the same for a state scheme, an occupational scheme and a private contract. Characterise it wrongly and the two returns disagree about when the income arises, which produces a mismatch no relief claim can repair. The characterisation is done once and then relied on every year.
Does Germany tax my US employer retirement plan while I live there?
It depends on how the arrangement is characterised, and that is a treaty question rather than a matter of what the plan is called at home. The articles dealing with pensions decide whether the German position follows the payments out or reaches the growth inside, and whether employer contributions are pay in the year they are made. An arrangement treated one way in its home country is not automatically treated the same way in Germany. Settle this before the first German assessment, because the position taken in the first year is hard to unwind afterwards.
Do I have to file in both countries during a long assignment?
Usually yes, for every year of the assignment. A treaty allocates the tax between two countries; it does not merge two filing obligations into one. So a long engineering or research posting normally produces a German return and a return in the other country for the same year, each reporting the same income, with one of them giving relief for the other country tax. The filings are separate documents on separate timetables, and the relief claim in the second return depends on the first being settled. That sequencing, rather than the rates, is what makes these years administratively heavy.
What do I file in the year I move to Germany?
The move year produces the fullest set of filings you will have. Germany assesses you for the part of the year its own residence rules reach, so the German return covers a period rather than the calendar. The return in the other country covers the whole year, because a US person obligation does not pause on departure. The items that straddle the move, such as a final bonus, equity vesting after arrival, or a pension contribution made either side of it, have to be allocated once and reported consistently in both. Do the allocation first and the two returns agree.
Do American citizens living abroad have to pay taxes?
American expats and green card holders need to file US returns for life, and many of them pay little or no US tax once the relief is applied — but the filing is what unlocks the relief, so the two questions have different answers. The exclusion for foreign earned income, the credit for foreign tax already paid and the treaty between the two countries between them usually leave the total at roughly the higher of the two countries' tax rather than the sum. Skip the return and none of it applies. See Americans abroad.
Do I have to file in both countries?
Frequently yes, and the two filings do different jobs. The country where the income arises taxes it at source; the country where you are resident taxes your worldwide income and then gives credit for the tax already paid. Filing only one side is what leaves relief unclaimed — the credit has to be asked for on a return. We prepare both sides so the numbers agree. See dual filing.
