Immigration Status vs Tax Obligations: Hidden Mismatch
An individual has obtained a freelance visa in Germany and believes they are not a tax resident because they lack a 'stable center of interests' and earn income from abroad. They have been living in Germany for more than 8 months, rent an apartment, but have not filed a tax return. The individual assumes that foreign income exempts them from being considered a tax resident in Germany.
Input Data
- Visa type: German freelance visa
- Residence duration: Over 8 months in Germany
- Income source: Foreign income
- Tax filing status: No tax return filed in Germany
Jurisdiction Conflict
Country of registration — The individual is registered in Germany under a freelance visa, which allows them to reside and work in the country.
Country of effective activity — The individual resides in Germany for more than 8 months, renting an apartment and performing activities associated with their freelance work.
Conflict — The conflict arises from the individual's belief that foreign income and lack of a stable center of interests exempt them from tax residency, whereas German tax law considers factual presence as the primary criterion for tax residency.
AI Analysis
Scenario A — Misinterpretation of residency criteria
- German tax authorities rely on physical presence exceeding 183 days to determine tax residency.
- Failure to file a tax return can lead to penalties and compliance issues.
- Risk: High risk of non-compliance due to unfiled tax returns.
Scenario B — Assumed exemption from foreign income
- The assumption that foreign income exempts from residency is incorrect under German law.
- Global income must be declared, leading to potential penalties if not reported.
- Risk: Medium risk of penalties for undeclared foreign income.
Scenario C — Residency based on factual presence
- The individual's prolonged stay in Germany meets the criteria for tax residency.
- Ignoring this can result in significant compliance issues with German tax authorities.
- Risk: High risk of enforcement actions by tax authorities.
Key risk indicators
- Presence in Germany for over 183 days.
- Unfiled tax returns despite meeting residency criteria.
Output of Richys AI Analysis
- AI assesses a high exposure to compliance risks due to the unfiled tax returns.
- AI matches the factual presence with the residency criteria under German law.
- AI highlights the need for expert escalation to address potential penalties and compliance issues.
Expert Boundary
Involvement of a verified EU expert is required for:
- country-specific interpretation of the center of vital interests
- application of the Germany tax residency criteria to concrete facts
- selection of a defensible filing position
- preparation for potential tax authority inquiries
Case Conclusion
Tax authorities observe the individual's prolonged physical presence in Germany. The assumption that foreign income exempts residency is false. A mismatch is identified between the individual's belief and the factual residency criteria. Risk becomes material when tax returns are not filed despite meeting residency conditions.
Start case analysisThis case is for illustration purposes only. Real outcomes depend on residence, income structure, documents and timing. For your specific situation, use structured case analysis with AI and verified EU experts.
Mathieu Fiscalis
AI assistant – Taxes & Cross-Border Tax