Progressionsvorbehalt: why foreign income can change your German refund
A common expat surprise is that income which is not directly taxed in Germany can still influence the tax rate applied to German taxable income.
Request my free preliminary check →What the mechanism does
Section 32b EStG provides for a special tax rate in specified cases, including certain foreign income. The income can therefore affect the rate without simply being added as ordinary German taxable income.
Why it matters in the relocation year
Someone who starts German employment late in the year may initially appear likely to receive a substantial refund. Significant pre-arrival foreign salary can reduce that refund through the rate calculation.
Provide the gross foreign employment income
For the preliminary check, tell us about foreign employment income earned in the relevant year before moving to Germany. Detailed documentation can be requested later if needed.
You can use the contact form without a Lohnsteuerbescheinigung and send your question first.
Ask a question or request a free check →Frequently asked questions
Does Progressionsvorbehalt mean double taxation?
Not necessarily. It is a rate mechanism; the cross-border tax treatment must be considered separately.
Can it eliminate a first-year refund?
It can materially reduce or sometimes eliminate an expected refund, depending on the amounts and circumstances.
This page provides general information only. The tax result and filing requirements depend on the individual facts and applicable law.