For thousands of British citizens living in Germany — whether as remote employees, entrepreneurs, or retirees — one of the most common questions is how to manage their UK tax obligations while residing abroad. Similarly, many German nationals who have worked or invested in the United Kingdom continue to receive UK income and must balance two tax systems simultaneously.
The task may sound daunting, but with the right understanding of residency rules, the UK–Germany Double Taxation Agreement, and the growing range of digital tools, managing cross-border taxes can be both efficient and transparent.
This guide provides a practical overview of how UK taxpayers in Germany can stay compliant, avoid double taxation, and plan more strategically for their financial future.
1. Determining Tax Residency
The first step in understanding your tax obligations is establishing where you are tax resident. Residency determines which country has the primary right to tax your worldwide income.
UK Tax Residency
Under the Statutory Residence Test (SRT), you are considered a UK tax resident if you:
-
Spend 183 days or more in the UK in a given tax year;
-
Maintain a home or close family ties in the UK;
-
Work full-time in the UK or return frequently.
Even those spending fewer than 183 days may still be deemed residents if other UK connections are strong.
German Tax Residency
Germany’s tax rules are based on residence and domicile. You are considered tax resident in Germany if you:
-
Have a permanent home available to you in Germany, or
-
Spend more than 183 days per year in Germany.
Residents are subject to German income tax on their worldwide income, while non-residents are taxed only on German-sourced income.
Dual Residency
When both countries claim tax residency, the UK–Germany Double Taxation Agreement (DTA) resolves conflicts by applying “tie-breaker” criteria:
-
Where your permanent home is located;
-
Where your vital interests (family, business, social ties) lie;
-
Where you habitually reside;
-
Your nationality.
These rules determine which country has primary taxing rights.
2. The UK–Germany Double Taxation Agreement
The DTA ensures taxpayers are not taxed twice on the same income and clarifies how each income type is treated.
Key Provisions
-
Employment income: Taxed where the work is physically performed.
-
Pensions: Usually taxable in the country of residence (Germany for most expats).
-
Rental income: Taxed in the UK but reportable in Germany with credit for UK tax paid.
-
Dividends and interest: Taxed in both countries, with offsetting relief to avoid duplication.
For example, if a UK retiree living in Berlin receives a pension from a UK private scheme, that pension is typically taxed in Germany. However, if the same individual rents out a flat in Manchester, the rental income is taxed in the UK, with Germany granting relief for UK tax paid.
3. When UK Expats Must File a Self-Assessment
Even after moving to Germany, certain individuals are required to complete a UK Self-Assessment Tax Return. You must file if you:
-
Receive rental income from UK property;
-
Earn dividends, interest, or capital gains from UK investments;
-
Draw a UK pension;
-
Continue to work remotely for a UK employer;
-
Are considered UK resident for part of the tax year.
How to File from Germany
-
Register with HMRC for Self-Assessment (using your German address).
-
Keep digital records of all UK income and any German taxes paid.
-
Use the DTA to apply for relief on double taxation.
-
File online via HMRC’s digital portal by 31 January following the end of the tax year.
Modern digital filing means UK taxpayers can manage the entire process online, eliminating paperwork and postal delays.
4. How Different Income Types Are Treated
Each type of income is taxed differently under UK and German law, and understanding these rules prevents overpayment or compliance issues.
a. Property Income
UK property income remains taxable in the UK, with deductions for mortgage interest, maintenance, and letting fees. Under the DTA, it must also be declared in Germany, where a credit is given for UK tax paid.
b. Pensions
UK pensions (State, private, or occupational) are usually taxed in Germany if you live there. However, UK government service pensions (e.g., military or civil service) are taxable in the UK only, though they may still influence your German tax rate (known as Progressionsvorbehalt).
c. Employment and Freelance Income
If you perform work physically in Germany — even for a UK employer — your salary is generally taxable in Germany. If part of your work is carried out in the UK, that portion may still be taxable there.
d. Investments and Dividends
Dividends from UK companies and interest from UK bank accounts are subject to UK withholding tax but must be declared in Germany, where credit is given for tax already paid.
5. Using Digital Tools to Manage Taxes Across Borders
The digitalisation of tax systems in both the UK and Germany has made compliance simpler and more accessible for expatriates.
UK: Making Tax Digital (MTD)
HMRC’s Making Tax Digital programme requires individuals and businesses to maintain electronic records and submit returns using compatible software. MTD improves accuracy and provides real-time insights into tax liabilities.
Germany: ELSTER
Germany’s digital tax filing system, ELSTER (Elektronische Steuererklärung), allows residents to file income tax returns online, manage tax accounts, and communicate securely with local tax offices. The platform supports English-language instructions and integrates with modern accounting tools.
Advantages of Digital Tax Systems
-
Easy access to past returns and payment records.
-
Automated calculations to prevent errors.
-
Secure digital storage for receipts and evidence.
-
Faster communication with both tax authorities.
For expats managing finances across two systems, digital platforms make it far easier to remain compliant and organised year-round.
6. Practical Financial Tips for UK Expats in Germany
a. Separate UK and German Finances
Maintain separate bank accounts for each country to simplify transfers, track income sources, and manage exchange-rate risk.
b. Monitor Key Tax Deadlines
-
UK Self-Assessment: 31 January.
-
German Income Tax (Einkommensteuererklärung): Typically 31 July, or 30 September if prepared by a tax adviser (Steuerberater).
Mark both to ensure timely compliance.
c. Budget for Tax Payments
Set aside 20–25% of additional or freelance income for taxes to prevent surprises at year-end. Exchange-rate fluctuations between GBP and EUR can affect total liabilities.
d. Track Currency Movements
Income earned in one currency but taxed in another must be converted accurately. Use official HMRC or Bundesbank exchange rates for reporting consistency.
e. Maintain Detailed Digital Records
Keep digital copies of contracts, payslips, bank statements, and property expenses. These are crucial for audits and for claiming DTA relief.
f. Review Pensions and Investments
Your UK pension or ISA may have different tax treatment in Germany. Review holdings annually with a qualified adviser to ensure your investments remain tax-efficient under both systems.
7. The Role of Professional Tax Advice
Even with sophisticated digital systems, international taxation remains complex. Misinterpreting residency, missing reporting deadlines, or claiming the wrong relief can lead to costly penalties.
Working with a cross-border tax specialist ensures accuracy and peace of mind. They can:
-
Verify your residency status under both tax systems.
-
Apply DTA provisions correctly.
-
Coordinate filings between HMRC and German authorities.
-
Identify legitimate deductions and reliefs to reduce your effective tax rate.
For UK taxpayers living in Germany, expert firms like My Tax Accountant offer professional assistance in managing self-assessments, residency questions, and relief claims efficiently, ensuring complete compliance and financial optimisation.
8. Combining Technology and Expertise
The most effective expat tax strategy blends digital convenience with human expertise. Software automates data entry, calculations, and submissions; professional guidance interprets rules, prevents mistakes, and provides strategic planning.
This balance gives expats:
-
Confidence in accuracy;
-
Reduced administrative burden;
-
The ability to make informed decisions about pensions, investments, and relocations.
9. Future Developments in UK–Germany Taxation
Tax cooperation between the UK and Germany continues to evolve, driven by international transparency initiatives. Both countries participate in automatic exchange of financial data, meaning income and assets are increasingly visible to tax authorities.
Future trends include:
-
Greater digital integration between tax systems;
-
Pre-filled tax returns based on shared data;
-
Real-time cross-border tax calculations.
These advances are designed to simplify compliance for honest taxpayers while increasing enforcement against evasion.
10. Living Financially Confident Abroad
Managing UK tax responsibilities while living in Germany doesn’t have to be stressful. By understanding residency rules, utilising the UK–Germany DTA, leveraging digital tools, and consulting qualified professionals, expatriates can ensure compliance while optimising their finances.
Whether you are a freelancer in Munich, a remote employee in Berlin, or a retiree on the Rhine, proactive tax management brings not just peace of mind, but also real financial benefits. It enables you to enjoy the advantages of living abroad while maintaining strong financial connections to the UK — safely, transparently, and efficiently.
