When Germany treats you as a tax resident

Germany decides who owes German income tax on worldwide income with two short legal tests: a home (Wohnsitz) or a habitual abode (gewöhnlicher Aufenthalt) in Germany. Either is enough. For an American, meeting one of them usually happens quickly after moving, often from the first day of a long-term lease.

I lived and worked in Germany, so I know the general shape of this from the payroll side: tax is withheld from salary from the first payslip, and the residency question mostly shows up in what you must declare and whether you must file a return. This guide sets out the legal tests, what follows from them, and how German residency interacts with US filing. It is general information, not tax advice.

Unlimited and limited tax liability

Section 1(1) of the Income Tax Act (EStG) states that individuals who have a home or their habitual abode in Germany are subject to unlimited income tax liability (unbeschränkt steuerpflichtig). In practice that means Germany taxes their worldwide income, subject to tax treaties.

People without a German home or habitual abode can still be taxed in Germany on German-source income, such as income from work performed in Germany or rental income from German property. This is limited tax liability, and Section 49 EStG lists the types of domestic income covered.

There is also an option in Section 1(3) EStG: people with neither a home nor habitual abode in Germany can apply to be treated as having unlimited liability if at least 90 percent of their income is subject to German tax, or their non-German income does not exceed the basic allowance. This matters mainly for cross-border commuters.

Test 1: a home (Wohnsitz)

Section 8 of the Fiscal Code (AO) defines it in one sentence: a person has a home where they hold a dwelling under circumstances suggesting that they will keep and use it.

Points to note:

• There is no minimum number of days. A dwelling you keep available and use can count from the start.
• Ownership is not required. A rented apartment counts.
• You can have homes in several countries at once. Keeping a house in the US does not prevent a German home.
• Registration with the authorities is a strong indication, but the legal test is about the actual dwelling, not about the registration itself.

For most Americans who sign an open-ended lease and move in, the home test is met from the move-in date.

Test 2: habitual abode (gewöhnlicher Aufenthalt)

Section 9 AO says a person has their habitual abode where they stay under circumstances showing they are not just staying temporarily. It then adds a bright-line rule: a continuous stay in Germany of more than six months always counts as habitual abode, from the beginning of the stay. Short interruptions are ignored.

There is an exception: the six-month rule does not apply if the stay is exclusively for visits, recreation, cures or similar private purposes and lasts no longer than one year.

Note the wording "from the beginning". If you stay more than six months, the habitual abode is treated as existing from the first day, not from day 184.

What changes when you are a resident

As a resident with unlimited liability:

• Your worldwide income is in principle taxable in Germany, subject to the US-Germany tax treaty.
• Your employer withholds wage tax (Lohnsteuer) based on your electronic tax data, which is linked to your tax identification number and your tax class.
• Interest and investment income are taxed, and German banks withhold tax on German accounts.
• Church tax applies if you are a member of a church that levies it, and banks and employers receive data for this through the Federal Central Tax Office.

The 2026 income tax tariff in Section 32a EStG starts with a basic allowance of 12,348 euros of taxable income for a single person, then progressive rates up to 42 percent and, at very high incomes, 45 percent. Married couples assessed jointly use income splitting.

Do you have to file a German return?

Not every employee must file. Section 25 EStG sets out the principle of annual assessment, and Section 46 EStG lists when an assessment is carried out for people whose income is mainly salary subject to withholding. Examples from Section 46 include:

• Other income not subject to wage withholding of more than 410 euros
• Salary from several employers at the same time
• A married couple where one spouse is taxed under tax class V or VI, or where the factor method applies
• An allowance entered for withholding purposes, above certain income levels

Other cases also trigger a return, and the tax office can require one. Under Section 149 AO, returns for a calendar year are generally due seven months after the year ends, with later deadlines when a tax adviser prepares them. Section 25 EStG requires electronic filing for people with business, farm or self-employment income.

Even when filing is not mandatory, many employees file voluntarily to claim deductions, such as work-related expenses.

Your tax identification number

The Federal Central Tax Office (BZSt) issues the tax identification number (Steuer-ID). After you register an address for the first time, the number is assigned and sent to you by post. Your employer needs it for withholding, and banks need it for reporting investment income. The separate guide on the tax ID in this series covers it in detail.

Dual residence and the treaty

An American living in Germany is in an unusual position: the US taxes citizens on worldwide income regardless of residence, and Germany taxes residents on worldwide income. Both claims exist at once.

The US-Germany income tax treaty, listed by the IRS with its 1989 text and 2006 protocol, allocates taxing rights and contains tie-breaker rules for people treated as resident in both countries under domestic law, based on criteria such as permanent home and centre of vital interests. Because of the US saving clause, the treaty does not generally stop the US from taxing its own citizens; instead, US relief usually comes through the foreign tax credit or the foreign earned income exclusion on your US return.

In practice, the order is:

1. Germany taxes your German salary as a resident.
2. You report the same salary on your US return.
3. You claim the foreign tax credit for German income tax or the foreign earned income exclusion.

Arriving and leaving mid-year

In the year you arrive or leave, you may be resident for part of the year only. German rules handle such years with specific provisions, and foreign income earned while not resident can still affect the German tax rate through the progression clause. When you leave, deregister your address and tell the tax office if you are filing for the departure year.

Checklist

1. Note your move-in date; it usually starts a German home.
2. Count days if you have no lease; more than six months triggers habitual abode from day one.
3. Watch for your tax ID by post after registration.
4. Check Section 46 EStG cases to see whether you must file.
5. Keep German payroll certificates for your US foreign tax credit.
6. Plan the German deadline alongside the US June and October dates.

Common questions

How many days in Germany make me a tax resident? There is no day count for the home test. Under the habitual abode test, a continuous stay of more than six months always counts, from the start of the stay, with an exception for purely private stays up to one year.

Does renting an apartment make me a German tax resident? It can. Section 8 AO treats a dwelling you hold in a way that shows you will keep and use it as a home, which triggers unlimited tax liability under Section 1 EStG.

Do German employees always have to file a tax return? No. Section 46 EStG lists the cases, such as side income over 410 euros or salary from several employers at once. Many employees file voluntarily to claim deductions.

Will I be taxed twice by Germany and the US? Both countries can tax you, but the US gives relief through the foreign tax credit or the foreign earned income exclusion, and the treaty allocates taxing rights.