Paul L. Caron
Dean




Thursday, March 11, 2021

Germany Seeks To Tax Income Of U.S. Soldiers Stationed There

Tax Connections, German Tax Authorities Reported To Be Imposing Tax On US Military Pay:

In an ongoing story, that is certain to be of interest to Americans abroad, Germany has begun treating certain US Military Personnel as tax residents of Germany. In other words, Germany is imposing tax (and apparently penalties) on the income earned by US military personnel stationed in Germany. The starting point is that US Forces in Germany (and other countries) are governed by the SOFA (“Status Of Forces Agreement”) agreement. Among other things, the SOFA agreement exempts US service personnel from being treated as tax residents of the country where they are serving. In simple terms: As long as the individual serviceman meets the conditions in the SOFA agreement, he/she would NOT be treated as a tax resident of Germany.

The provisions of the NATO SOFA are unremarkable. What is remarkable is that Germany appears to be the first country, to determine that certain US Military Personnel, are not entitled to use SOFA as a “shield” against being treated as a tax resident and therefore subject to taxation.

(Hat Tip: Ted Seto)

https://taxprof.typepad.com/taxprof_blog/2021/03/germany-seeks-to-tax-income-of-us-soldiers-stationed-there.html

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