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Good afternoon, Dr. Tersi
I'd like to start by thanking you for your generosity in making precise guidance on the various subjects covered in your blog available to everyone.
After reading this article I was left with some doubts, so I'll recap below what I've understood (correctly, I hope), apply it to a specific case and finally ask a question.
My son recently moved to Germany, where he started working, but has chosen to maintain his tax residence in Brazil, where he has invested his savings. That's why he's not going to formalize his definitive departure from the country with the Receita Federal: he will continue to file his tax return in Brazil and will now have dual tax residency.
Since you earn your salary in Germany, you are taxed according to local law. As a result, you will also be tax resident in Germany, where you will file your annual tax return, which will only include income earned in Germany.
As has been explained very well, Brazil and Germany do not have an agreement to avoid double taxation, but the IRS recognizes reciprocal treatment between the two countries. This is why, in addition to the income earned from financial investments in Brazil, salaries received in Germany will also be included in your tax return to the Receita Federal. These salaries will be entered on the Receipts from Individuals/Exterior tab, together with the amount of tax withheld at source by that country. German federal taxes are higher than the 27.5% charged here. Therefore, after converting the currencies (euro to dollar and dollar to real, according to Central Bank rules) and declaring the taxes already paid in Germany, there would still be a surplus of tax paid, favorable to the declarant. In other words, nothing owed to the Brazilian tax authorities.
The big question is: my son and his wife, who also works in Germany, don't have EU citizenship or permanent residency, but only a work visa ("Blue Card") in his case, and a family reunion visa in hers. Would the German tax authorities have the legal basis to demand that income earned exclusively in Brazil also be declared in Germany, in order to collect any tax differences? Isn't it precisely to avoid this kind of double taxation that international agreements - or in Germany's case, reciprocity - exist?
And finally, a question: does your office file tax returns (for the German tax authorities) for Brazilians who work and live there?
Thank you for your attention.
