US Reservists are an essential part of the US Military footprint in Europe. Thousands of US citizens who have otherwise “normal” jobs and lives on the German economy dedicate so many weeks out of every year to stay sharp and ready for activation should the hour of need arise.
Unlike their regular AD counterparts US Reservists enjoy only certain privileges while in the Reserves. They are also not drawing the full paycheck. However, it is foreign income so it at least needs to be reported on the German tax returns, along with the other ordinary income from the job one might have with BMW or the regular 1099 investment income.
This is when things get confusing for the poor tax office and in order to get a hold of your situation, they will argue along the lines of that
- you are not in Germany under SOFA
- you are not in country for solely professional reasons
- you do not have an intent to return
and so on. Depending on the above the will want to either consider you Reserve pay just for your German tax bracket or they will try to include it fully in the German tax base.
Neither of the tax office’s approach is actually correct – and a brief look into the Status of Forces Agreement would actually suffice to set the tax office straight. However all too often this is exactly what they do NOT do as German law – and to some extent tax treaty law is what they are familiar with.
This is where the taxperts can help. We are happy to put a few nice lines together explaining this particular situation to them in no uncertain terms and knock your US Reserve pay out of the German tax system for good.
The only thing that would need to be met is that you are assigned to a Germany-based Reserve unit. If your Reserve unit is outside of Germany – even another European country (Vicenza, Lakenheath…) this approach may not work as well or not at all.
Please let us know if this is an area where you have a disagreement with the tax office.
