Germany–U.S. · Employment Income
Workdays Germany–U.S.
How should employment income and individual compensation items be allocated between Germany and the United States when an employee works in both countries? The key factors are the actual workdays, the physical place where the services are performed and reliable documentation.
Article 15 Germany–U.S. Tax Treaty
Employment Income Is Allocated to the Country Where the Work Is Actually Performed
If an employee performs services in both Germany and the United States during the relevant compensation period, the employment income generally has to be allocated between the two countries. The starting point is the place where the services are physically performed.
If a compensation item cannot be directly assigned to specific services, regular salary is commonly allocated based on the ratio of actual workdays in each country to the total workdays during the relevant employment or earning period.
The workday allocation answers a different question from the 183-day clause: workdays are used to allocate the amount of compensation, while presence days are used, among other things, to determine whether the work country must give up its taxing right under Article 15(2).
Basic Framework
Three Numbers Must Be Documented Separately
Total Workdays
The actual workdays during the relevant compensation or earning period generally form the denominator of the allocation.
German Workdays
Days on which the services are physically performed in Germany are generally allocated to Germany as the work location.
U.S. Workdays
Days on which the services are physically performed in the United States generally form the U.S. work-country portion.
Actual Workdays
The Physical Work Location Counts
Full Workday in Germany
If the services are performed exclusively in Germany, the day is generally allocated to Germany — even if the employer is based in the United States.
Full Workday in the United States
If the services are performed exclusively in the United States, the day is generally a U.S. workday — even if the employment relationship is with a German employer.
Home Office
A home-office day is allocated to the country where the employee is physically located while working. A German home-office day is therefore generally a German workday.
Work in Both Countries on the Same Day
For German wage-tax withholding, current German administrative guidance treats a day on which work is performed both in Germany and abroad as a German workday. The actual facts should nevertheless be documented consistently for the final treaty allocation and foreign tax return.
Vacation, Sick Leave & Travel
Not Every Calendar Day Belongs in the Workday Allocation
For regular employment income, the allocation is generally based on actual workdays. Vacation days and sick days are therefore usually not treated as actual workdays and reduce the denominator of the allocation key.
Travel days require a closer look at whether and where services are actually performed. Purely private travel should be distinguished from a travel day involving employment activity.
- vacation days are generally not actual workdays
- sick days are generally not actual workdays
- weekends without work are generally not workdays
- a travel day with work is analyzed based on the actual place of work
- mere presence in a country does not by itself create a workday
- separate presence rules apply for the 183-day threshold
Example
20 Actual Workdays in One Month
An employee receives monthly employment income of €10,000. During the month, the employee has 20 actual workdays: 12 days physically worked in the United States and 8 days physically worked in Germany.
Assuming the salary is paid evenly for these services and no special compensation item is involved, 60% of the employment income is attributable to U.S. work and 40% to German work.
Compensation Period
The Correct Denominator Depends on What the Compensation Is Paid For
Regular Monthly Salary
For regular monthly salary, a monthly allocation using the actual workdays of that month is often appropriate. Permitted forecasting methods may also be used for German wage-tax withholding.
Annual Salary
For an annual analysis, the actual workdays during the entire relevant employment period may be the appropriate allocation basis.
One-Time Compensation
For bonuses, severance payments or equity-based compensation, the first step is to identify the period and services to which the payment economically relates.
Change of Employer
If the employer or the employee's function changes, the relevant earning period may need to be divided. A single annual allocation ratio is not automatically appropriate.
Bonus & Equity Compensation
The Payment Date Is Not Automatically the Earning Period
Variable compensation must be analyzed according to its economic connection. A bonus paid in 2026 may, for example, relate to services performed in 2025 and therefore require allocation based on the 2025 workdays in Germany and the United States.
For stock options, Restricted Stock Units and other multi-year compensation programs, the relevant period may extend over several years. A move, change of employer or leave of absence during that period can further affect the allocation.
- determine the performance or earning period for bonuses
- the payment date alone is generally not decisive
- RSUs and stock options may involve multi-year periods
- document workdays for each relevant period
- consider immigration into or emigration from a country during the vesting period
- reconcile German and U.S. payroll data
Documentation
A Reliable Workday Calendar Is the Foundation
Calendar
For each day, document the country, whether it is a workday or non-workday and, where relevant, the type of activity performed.
Travel Evidence
Flights, train tickets, hotel records, travel-expense reports and immigration records can help substantiate the employee's physical location.
Payroll & Compensation
Payslips, bonus plans and equity documents should be consistent with the earning period used for the allocation.
Typical Situations
When Workday Allocation Becomes Especially Important
Hybrid Work Between Germany and the U.S.
Regular work in both countries requires continuous day-by-day documentation rather than an estimate prepared at year-end.
Business Trips to the United States
Even individual physical U.S. workdays generally belong in the work-country allocation, even if Article 15(2) later prevents U.S. taxation.
U.S. Employer, Home Office in Germany
Workdays performed from a German home office are generally German workdays and can trigger German payroll obligations.
Move During the Year
Before and after a move, residence, work location and the allocation of regular or variable compensation may change.
Bonus Paid After Returning to Germany
A later payment after returning to Germany may still relate partly to U.S. work if the bonus was earned while services were performed there.
RSUs Vesting Over Several Years
For multi-year vesting, workdays from several tax years and both countries may be relevant to the allocation.
Related Guidance
Related Topics
Frequently Asked Questions
Workdays Germany–U.S.
Are workdays and the 183 days the same thing?
Does vacation count as a workday?
How is a day counted if I work in Germany in the morning and in the United States later the same day?
Is a home-office day in Germany a U.S. workday if my employer is in the United States?
Which workdays should I use for a bonus?
Germany–U.S. Tax Advice
Do You Regularly Work in Germany and the United States?
We determine the appropriate workday and earning period, analyze the treaty allocation of salary, bonuses and equity compensation, and coordinate the treatment with German and U.S. tax returns and payroll.
Schedule an Initial Consultation