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Last year I received some bonus payments from my previous employer (I worked in Germany the year before and lived/worked Germany until the end of that tax year).

The bonus was deposited in my German bank account at the beginning of last year, meaning that for my taxes purposes it has to be declared in the 2020 tax year even if I did not live/work in Germany at that time.

Now, in an online software which I use to prepare my German tax returns, it computes that I owe a hefty amount of German tax. The rationale is that it counts my last year income (indicated as foreign income for Germany) to determined the tax rate they will apply to my German taxable income (bonus payment), the software indicates that this is determined by the "progression clause (Progressionsvorbehalt)".

I can see that this is expected and fair for a person working or living, partially or fully, in Germany, however, I wonder if it does applies for a person who did not spent a single day living/working that taxable year in Germany.

I currently live outside of EU.

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  • Does Last year I received some bonus payments from my previous employer (I worked in Germany the year before mean Last year (2020) I received some bonus payments from my previous employer (I worked in Germany the year before (2019)? So the payment actually recieved in 2020 was for work done in 2019? If yes, this would be a question for a tax advisor to determine which year counts. – Mark Johnson May 25 at 16:36
  • Should it be 2020, that may be based on January 2020 (€ 10000*12=€120000). Since that was the only earning in 2020, the tax refund for 2020 would return a lot of the paid tax since the yearly earning is €10000 instead of the estimated €120000. – Mark Johnson May 25 at 16:37
  • If you have not done so, submit a tax for 2020 with the bonus income as sole earning. Both (2019+2020) tax returns should then balance out. – Mark Johnson May 25 at 16:43
  • @MarkJohnson that was not the sole earning for 2020, during that year I work in another country. – ViB May 25 at 20:20
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    @user102008 Ich bin Arbeitnehmer und Staatsangehöriger eines EU- / EWR-Staates, habe im Hoheitsgebiet eines dieser Staaten meinen Wohnsitz oder gewöhnlichen Aufenthalt und beantrage die Veranlagung zur Einkommensteuer (§ 50 Abs. 2 Satz 2 Nr. 4 Buchst. b EStG). – Mark Johnson May 27 at 15:55
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It seems correct. The money is Germany-sourced income since it is work income (bonus) from work performed in Germany (even though the money was received in a different year than when the work was performed). Therefore, it should be taxable in Germany no matter where you live.

It seems that your complaint is that the fact that it is taxable in 2020 instead of 2019 (due to your company paying that money to you after the new year) caused you to have to pay more tax since your tax rate in 2020 happens to be higher than in 2019. Well, that's just bad luck. It could just as well have worked the other way if circumstances had been different -- i.e. if your tax rate in 2020 happened to be lower than in 2019, then the fact that the money is taxable in 2020 instead of 2019 would have caused you to pay less tax.

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