Moving to Germany

Hello - I have been approached about relocating to Germany. I am currently jointly assessed with my wife, who earns a small wage, and pay into a DC pension here in Ireland. I am trying to evaluate what I will need to earn to make this move worthwhile financially. The plan is that I would relocate, leaving my family in Ireland. I would be spending enough time in Germany to be considered non-resident for Irish tax purposes as far I as I can tell.

Generally, based on the limited information provided above, what are some of the things I should be thinking about from an income tax and pension perspective? I am not familair with the German income tax system, one thing I am certainly concerned about is how to ensure I keep my pension pot ticking over - I am not that close to retiring but I do hope be doing so in 15 years or so.

Ultimately, I will look to get professsional advice if this looks like like it will make sense, but would like to see if there are some things to be aware of at this stage.

Might be some useful info here?

Thanks ClubMan - good to see you are still around.

CCOVICH said:

Hello - I have been approached about relocating to Germany.

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Will you be employed or self-employed in Germany?

If employed, is it a kind of secondment from an Irish entity? Or a separate contract of employment under German law?

How long do you intend to do this for?

Talk to HR. Larger companies engage the likes of EY to model up the move for you from financial & tax perspectives at the expense of the company.

Don't take everything they say as 100% complete or 100% accurate but it is a starting point for modelling up your move. Best of luck.

Be aware that you will be assessed as a single person in Germany. You cannot elect to be jointly assessed if your spouse is not also tax resident in Germany so you lose that fairly big benefit you have in Ireland where you are currently jointly assessed. If you elect to make voluntary payments into an Irish pension, these should be deductable when completing your German tax return. I make voluntary PRSI contibutions in Ireland and can deduct these payments on my German return. I believe a private pension is treated the same (Google Altersvorsorge). There are no tax benefits beyond this, ie you cannot fund your Irish pension with untaxed income and defer the taxation until pension drawdown. You would have to pay income tax on your salary and fund your Irish pension contributions out of that taxed income. That's assuming you can even make contributions to your scheme after you have left the employer. I worked for IBM in Ireland and once I left their employ my pension pot was frozen and it was not possible to add to it.

One positive thing about living in Germany is the ease with which you can invest in ETFs. It's almost as easy as depositing money in a savings account. No onerous tax obligations anymore. Most of the heavy lifting is done by the financial institutions as long as you invest through German ones like Trade Republic, Scaleable etc.

If you earn rental income in Ireland this is not taxable at all in Germany and does not effect your tax rate on your taxable income (Progressionsvorbehalt). It is only taxable in Ireland.