Mobility allowance taxed in...

I have received an IEF in UK and confirm that here they tax the mobility and career allowance.

Indeed, my IEF in the UK was the same...

Dear Maria, can you comment on the tax rate in Germany? I was wondering for an ER in Germany, if the mobility contribution is tax free, than the ER tax rate is 15%, right? Do you know if this is true for all Germany, or will there be differences in different cities? Thanks!!! Unfortunately I do not have information for the UK.

Hi Katryna,

I don't know the tax rate for Germany but I assume that the percentage of tax increases dependining on the salary level. So, if the taxable amount is lower (not including the mobility allowance), the tax rate could also be lower. It might thus be that removing the mobility allowance from the taxable pay requires a recalculation of the taxes on the salary according to a different tax rate.
I am not sure if there are differences in the contributions in the different German federal states, it could also be, given the federal system in Germany. Anyway, the taxes amounts should be all visible in the pay slip.

Ciao,

Maria Paola

Hi Katryna,

I don't know the tax rate for Germany but I assume that the percentage of tax increases dependining on the salary level. So, if the taxable amount is lower (not including the mobility allowance), the tax rate could also be lower. It might thus be that removing the mobility allowance from the taxable pay requires a recalculation of the taxes on the salary according to a different tax rate.
I am not sure if there are differences in the contributions in the different German federal states, it could also be, given the federal system in Germany. Anyway, the taxes amounts should be all visible in the pay slip.

Ciao,

Maria Paola

Thank you for your answer! I thought because you had an IEF in Germany, you are familiar with the rates. I'm not in Germany, but just wanted to know this information because of course it has a big impact on the net salary.

Thanks to Sara and Mehmet. Not so nice that they tax the mobility allowance here in the UK. Also because I did not expect this, having had the mobility allowance tax free in Germany for a Marie Curie of the identical type. While I was looking for a flat I requested information about my net salary from my host institution and the National Contact Point for the UK. Neither one could tell me, not even roughly, what my net salary in the UK would be. So I did not know how much I could afford to pay for a flat during my flat search, and rents are much more expensive here in the UK than in Germany. I got the first salary so far and apparently they paid me the mobility allowance twice: once tax free and once taxed together with my salary. I have asked for explanations and I am waiting for an answer.

Ciao,

Maria Paola

Hi all from Trento. I am currently at the Marie Sklodowska Curie Conference at Trento University. I raised the taxation question to Alessandra Luchetti, who is the head of the Marie Sklodowska Actions Unit at European Commission. Here is her comments and mine in paranthesis:

1 - I received this question many times before. (Why do not you do anything about it?)

2 - We pay top money to researchers. (I wonder how much she earns, what are her qualifications, and what kind of researchers she is talking about.)

3 - We cannot do anything about it. (Why do you hold this position if you cannot do anything about it?)

4 - At least now the mobility allowance is NOT subject to tax. (This is good! I wish you let everyone know about it!!!)

So, all in all, European Commission does not have any intention to get involved with the tax issues unless we keep rising this issue at any level until they see it as a big problem! Also, mobility allowance is NOT and should NOT be subject to taxation.

Please raise this issue as much as you can at any opportunity. After all European Commission is funded by public taxes and shall respond to your concerns.

For those whose allowance is taxed; you better fight for your rights. Mobility allowance SHOULD NOT be subject to taxation.

Best regards,

Dear Osman, thanks so much for your reply!!! I also don't understand what the problem is about clearing up the tax issues. The mobility contribution should be added as a tax exemption (or a deductable), clearly stated in the employment contract, and there you go! Is there anyone at the European Commission or Marie Sklodowska Actions who can and is willing to do something about this?

The tax situation in the Netherlands, where the net salary of a Marie Curie fellow (IEF with less than 10 years experience) in the past years was comparable with that of a first-year PhD student, despite the substantial difference in years of working experience and despite the mobility required from MC fellows, can be found online when you search on google for "Financial aspects of a Marie Curie Fellowship in the Netherlands". (For those who will really want to make a European overview).

In Spain in 2011-2013 the mobility and career allowances ended up on the payslip and were taxed, which also affected the taxation class / strength of taxation. This does not correspond with the information provided in advance that the allowances are tax free.

Hi everybody,

I just found this document which might apply to our case:

http://www.hmrc.gov.uk/manuals/eimanual/eim34030.htm

Can anyone help to understand this?

It seems that subsistence costs for working outside the UK are tax free for UK residents. I cite the document:

"The employee's earnings include an amount in respect of:
- the provision of accommodation or subsistence outside the United Kingdom for the employee for the purpose of enabling the employee to perform the duties of the employment, or
- the reimbursement of expenses incurred by the employee on such accommodation or subsistence for that purpose.

Nature of the deduction
Allow the cost of the employee's accommodation or subsistence outside the United Kingdom where all the above conditions are satisfied. If the accommodation or subsistence is wholly for the purpose of enabling the employee to perform the duties of the employment, then the deduction will be equal to the amount included in earnings."

This "amount included in earnings" might be a sort of mobility allowance for UK residents working overseas.

How did I find this document? Because in a file the administration of my host institution defined "Subsistence-Staff Overseas" my mobility allowance, so I tried to search these keywords in the HM Revenue & Customs website. Note that the administration is taxing me the mobility allowance though.

So could these rules for UK residents working overseas be valid for us, too, coming from abroad to work in the UK? I think they should, but can we find this written somewhere?

The fact that so far I hear only of MC fellows with taxed mobility allowance in the UK, doesn't mean to me that this is ruled by the local legislation. In fact, we know the case of Germany (see other threads) where many fellows get the mobility allowance taxed and are told by the National Contact Point that it should be so, although German law indicates that the mobility allowance is tax free.

Could you give a look at this document I linked and see if it can help us to get the mobility allowance tax free?

Ciao,

Maria Paola

Hi everybody,

so this is us: working in the UK but domicilied somewhere else (e.g. country of origin):

http://www.hmrc.gov.uk/manuals/eimanual/eim35090.htm

Can someone understand what the document means to us? I am not sure.

It says:"This approach provides a built-in test. In the usual case, it will limit the deductions to the amounts that an employer is prepared to pay." Does this mean that the employee (us) does not pay any deductions?

Ciao,

Maria Paola

Dear Maria, I'm preparing all the documents to do taxes in Germany this year (for year 2014), and of course everything including the mobility is taxed because at my host institution they can only prepare everything in the standard way. I'm trying to find a tax advisor or a service, anyone who can help me file the taxes and maybe get some of this mobility tax back, but after many emails, every tax advisor is unfamiliar with this and cannot help. Can I ask you, who was the person that helped you to get the document from the Finanzamt in Dresden? Could that person help me, or maybe give me a recommendation for a tax advisor who would know how to handle this? Thanks, Katryna

Dear Katryna,

My name is Maria Paola, not Maria. :-)

It is definitely worth doing the tax declaration in Germany, because you will get something back.

The document from the Finanzamt was given to me by my host institution, the Technical University of Dresden, to show that the mobility allowance should not be taxed.

If you know German and have a friend or someone who knows how to do a tax declaration, the very best thing is to learn how to do it yourself. I mostly did it myself and only once with the finance advisor, and I found it definitely better when I did it myself.

If you need a finance advisor it is probably best to ask colleagues or friends to find a good one.

The one I did the declaration with an advisor it was with the "Lohnsteuerhilfeverein Vereinigte Lohnsteuerhilfe e.V.", but, as I said, I was not so happy. For instance, the advisor wanted to tax my mobility allowance... Imagine. So you have to pay attention to what they do. Luckily I did, so we corrected the mistake. Probably, no advisor is familiar with the mobility allowance, it does not happen very often to them.

What I advise you is to bring him/her the document I got from the Finanzamt Dresden insisting that the mobility allowance should not be taxed and that you should get that part of taxes back. He should formulate this request in your declaration.

If the Finanzamt won't agree, you will probably get taxes back if the amount of money you spent for your mobility is higher than the mobility allowance you got.

You should declare all your moving costs (parcels sents with the post, flights, hotel where you stayed while looking for the flat, travels to pick up more of your stuff from your home country/previous residence, etc.), travels to see family regularly etc, and also all costs you had related to work (which were not paid from your MC grant). If you want to try with the "Lohnsteuerhilfeverein Vereinigte Lohnsteuerhilfe e.V." you might get a different advisor, better than the one I got, who knows. Other things you put in the tax declaration are medical expenses, costs of travels from home to work...

If you need more information, feel free to ask me.

Best wishes,

Maria Paola

Dear Maria Paola,

Sorry for getting your name wrong before!!! Thank you for your explanation. Yes, going through this process for taxes is frustrating. Unfortunately my colleagues are also other Marie Curie fellows, and they didn't even know that mobility should not be taxed. The host institution is a company, and when I initially contacted them with this information before I signed the contract, to make the contract in the proper way without taxing mobility, they told me that this tax free mobility does not apply to me, and they will do things in the standard way. So basically no help with anything. So the other advice I got was to find a tax advisor, which is what I have been doing, however, I get replies that basically say "sorry, we are unfamiliar with this issue and good luck finding someone to help you". This means to me that they are unwilling to try. This is why I was really hoping that you had a name of a person who could help. Well, I will continue contacting more people and we will see how it goes. If I find useful information I will definitely share with everyone here! Thank you!!! Katryna