Double taxation Germany

Hi there, I have three question on double taxation. 1) I was awarded RSUs from a US parent company while tax resident in Germany in 2019. On vest they shares delivered were income taxed in Germany through the German subsidiary on German payroll. I changed tax residency in Feb 2021, I got moved to the UK subsidiary and onto UK PAYE. I received 3 more vests in 2021 and paid PAYE on UK payroll for the employment income received. Are the whole vests in 2021 in the UK taxable under the DTA or only the proportion of the work days I spent in the UK given that the RSUs were awarded in 2019 and then vest on a three monthly schedule thereafter? 2) I applied for split year treatment 2020_21 on self assessment, although the company put me only on the UK payroll in April 2021. The reason was that I left the German payroll Feb 2021 and got paid in Sterling in March from the UK sub, but my payslip only taxed me in the tax year 2021_2022. I declared that income related to 2020_2021 on the split year self assessment. The company does not want to correct their payroll submission although HMRC issued a pay and difference notice for both tax years. What can I do? 3) Lastly my UK payslip for April 2021 contains a bonus which was paid in respect for services rendered in 2020 (when I solely was German tax resident). Under DTA treaty this needed to be taxed in Germany, but has also been taxed through PAYE in the UK, Again the company refused to amend its PAYE submission to HMRC. What can I do? Thanks for your help!

Hi,

1. It would all fall under the split year system and declare the UK income.  
2. If the tax is paid in Germany you can opt to change the date of split year or claim foreign tax credit relief.  
3. For the bonus, you would still declare the income in the UK as paid when you were tax resident here but claim Foreign Tax Credit Relief for the tax paid in Germany, bonus payment only.

You can find further guidance here:

Tax on foreign income

Thank you.

First of all thank you for your reply. I just have an additional query on scenario 1) and 2). 3 is clear now. On 1): Upon further research on the OECD standard DTA Article 15 (Income from employment, in the German / UK DTA it is Article 14) the commentary is clear that if you have for example a 3 year vesting period and you change residency in between the taxable employment income should be apportioned for example according to works spent in either contracting states. Similarly UK domestic law ITEPA03/S41 follows a similar principle. My question is how is this operated in self assessment? Fact pattern: I am resident in the UK after I moved from Germany to the UK. My RSU awarded in 2019 vests (not in the split year anymore) but in 2021/2022 tax year (the self assessment which is due now). I get taxed from the UK sub (ie an entity in the same Group of entities) at source through PAYE on the full benefit in the UK ( that is market value at vest). However, 500 out of 750 work days should be taxed in Germany. I am taxed on the arising basis in the UK. Do I a) Deduct the proportionate amount from my UK employment income on the return (and thereby create a difference to my P60 amount reported) because when I was exercising the 500 work days I was also resident in Germany or b) Tax the 500 work days on a return in Germany and then claim foreign tax credit relief. Ie the tax at source is fully payable and I have to wait until I have to pay the German tax before getting relief.Thanks. 2) On this fact pattern there is no issue with foreign tax credit relief but with the allocation of the employment earning to the correct tax years. The fact pattern is such that I was working for the UK entity in the UK split year part of the tax year 2020/2021 after moving here. I got cash in Mar 2021 from the UK sub for Feb and Mar 2021 (the employer called it an advance because he was not able to put me on the payroll for some reason), but that amount ( the Feb/Mar gross employment earnings) got only taxed on my April 2021 payslip. Therefore there was no payroll submission to HMRC by the UK sub for the UK part of the split year 2020/21. The whole amount got retrospectively taxed on the April payslip. The employer although acknowledging the mistake does not want to initiate an Earlier Year Submission to correct this allocation in PAYE. If this stays like this I cannot take advantage of the personal allowance I would get for the UK part of the split year and have to pay substantially more tax in 2021/2022. I declared the amount for Feb and Mar 2021 in a self assessment return for 2020/2021 but now I want to deduct that declared amount in my 2021/2022. How can I do this given this creates a difference on my P60 for 2021/2022. (I obviously did not get a P60 for 2020/2021 because my employer did not do a payroll submission)? Thanks.

Hi,

You will claim this as other reliefs in your tax return.

Tailor your return at section 3 to answer yes to the question. This then opens other boxes and you will claim this under foreign income not taxable in the UK.

If you are claiming this for 2020 to 2021 also, you can still amend your return online until 31/01/23.

Thank you.