New version of the Foreign Activities Decree

ATE: not abolished, but reformed!

The German tax authorities have reformed the ATE with effect from 2023. We inform you about the significance of this revision for the tax-free payment of wages for cross-border employee assignments.

The purely German regulation of the ATE (Auslandstätigkeitserlass – BMF, letter of 31.10.1983), which enabled the tax-free payment of wages when employees of a domestic employer worked abroad if specific conditions were met, had long been controversial in the EU and it was often expected that this tax advantage would be abolished without replacement.

Now, however, the BMF has reformed and revised the ATE in a letter dated 10 June 2022 (BMF, IV C 5 – S 2293/19/10012:001). Tax advantages continue to exist for employees.

The ATE states that if the conditions are met, Germany waives its right to tax the salary for certain favoured activities abroad if there is no double taxation agreement (DTA) with the country of activity abroad. This is a clear advantage for employees of German employers abroad to avoid double taxation. Historically, the main reasons for this preferential tax treatment of workers abroad were economic and developmental.


Contents of the reform of the ATE

The reform of the ATE that has now taken place essentially includes:

  • Beneficiary employers are not only domestic employers, but now also those with a registered office, management, permanent establishment or a permanent representative in an EU/EEA country.
  • With regard to the beneficiary activities, the extension has been made so that for the first time the provision of advice to foreign clients or organisations within the scope of beneficiary activities is also to be regarded as a beneficiary activity within the meaning of the ATE.
  • Activities that do not benefit are renovation, restoration, cleaning and security work on buildings without industrial or technical use. Activities in the field of humanitarian aid are also not eligible.
  • The activities of shipboard personnel on seagoing vessels and the production of ships abroad are also non-beneficiary activities.
  • Whereas previously no proof of foreign taxation had to be provided for tax exemption in Germany when applying the ATE, the new version of the ATE now stipulates that proof of a minimum taxation of 10% abroad must be provided.
  • With regard to the duration of the beneficiary activity, it was clarified that not only the days of holiday and illness, but also blocks of free time (including work-free weekends and public holidays) are deemed to be harmless interruptions if the foreign activity is carried out for a total of at least 3 months in a state with which there is no DTA.


The rule that wages paid tax-free in Germany under the ATE for a favoured activity abroad continue to be subject to the progression proviso remains unchanged.

The new regulations of the ATE apply from the assessment period 2023.

We recommend that companies and employees who make use of the ATE familiarise themselves with the new regulations and their effects at an early stage.


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