What regulations apply to public sector employees abroad outside the EU?

Special tax regulations apply to civil servants and public sector employees residing outside the EU if they continue to work for a German public law entity.

Unlimited tax liability despite living abroad

Certain individuals are still considered unlimited income tax liable (§ 1 para. 2 EStG) even without a residence or habitual abode in Germany:

• They hold German nationality,
• they have an employment relationship with a domestic legal entity under public law (e.g. federal government, states, municipalities),
• their wages are paid from a domestic public fund,
• household members also hold German nationality or have income taxable only in Germany.

This regulation particularly affects individuals with diplomatic or consular status.

Option for unlimited tax liability (§ 1 para. 3 EStG)

Individuals without diplomatic status can also apply to be treated as unlimited income tax liable if they have domestic income according to § 49 EStG.

Important: Only if residing in an EU or EEA country is there an additional entitlement to family-related tax benefits such as spouse splitting or child allowance. Outside the EU/EEA, this entitlement is generally excluded.