CONVINUS Global Mobility
CONVINUS Global Mobility Insights - Frühling / Spring 2025Accumulated business-related stays in the USA, including weekends, do not exceed183 days in a calendar year.His salary is borne economically by the German parent company, as K was workingin the USA solely in the interests of the parent company. There was also nopermanent establishment of K's parent company in the USA to which K belongedeconomically.K spent a three-week holiday in the USA with his family in the summer of 2023. As aresult, K exceeded his stay in the USA to over 183 days in the 2023 calendar year.His employer's HR office was not aware of the family holiday.In 2023, K earned income from employment (Section 19 EStG) in the amount ofEUR 250,000. The annual bonus from 2022 in the amount of EUR 50,000 accrued tohim in 2023 and is included in the 2023 income tax statement.The annual premium from 2023, which is expected to be EUR 100,000, will be paid tohim at the beginning of 2024 and will be subject to German income taxaccordingly. In 2024, K will no longer be travelling to the USA on business, but willinstead devote more time to the Asia-Pacific region for his employer.K worked a total of 230 days for his employer in 2023, of which 130 days weredemonstrably spent in the USA.K consulted a tax consultant (S), who assessed the tax situation. It turned out thatthe income tax deduction had not been made correctly by his employer. K was veryangry about this.Taxation of employment income:K has a place of residence in Germany in accordance with § 8 AO and is thereforesubject to unlimited tax liability in Germany.His employer subjected his salary of EUR 250,000 for 2023 to German wage tax andpaid it to the tax office. However, according to the facts of the case, K physicallycarried out part of his work on site in the USA.38
CONVINUS Global Mobility Insights - Frühling / Spring 2025He was working in the interests of the German parent company. His salary wasborne economically by the parent company and paid to him.Furthermore, the parent company did not have a permanent establishment in theUSA to which K was assigned.The parent company was not aware that K had been physically in the USA for morethan 183 days because the family leave was not noted in the employee's workcalendar.According to Article 15 (1) DTA-USA, the principle of taxation applies where thephysical (labour) activity is carried out.The USA would therefore have the right to tax the labour income. It must also bechecked whether the right of taxation does not revert to Germany, Art. 15 (2) DTA-USA. For this, the three requirements must be met cumulativelya) Residency in Germany within the meaning of Art. 4 DBA-USA and,b) have not stayed in the USA for more than 183 days andc) the remuneration is not paid by or on behalf of an employer who is n ot domiciledin the USA.a) and c) can be disregarded, as it can be proven that K physically spent more than183 days in the USA in calendar year 2023.This was due to his family holiday in the USA. When calculating K's days of stay, itis irrelevant whether they are weekends or holidays. In this respect, the right oftaxation in the USA applies to days physically worked in the USA.The right to tax K's 2023 salary is to be split between the USA and Germany due tothe 183 days in the USA being exceeded. The salary should be split between theUSA and Germany for taxation purposes.The right to tax K's 2023 salary is to be split between the USA and Germany due tothe 183 days in the USA being exceeded. The salary should be split between theUSA and Germany for taxation purposes.39
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