Question
A Muslim who is legally residing and working in Germany intends to undertake freelance work in his spare time in addition to his regular employment. He has been advised that the income from this freelance work could be received in his home country rather than in Germany, with the aim of avoiding German taxation.
In support of this approach, several arguments are put forward: that the money is ultimately being brought to and used in the home country and therefore should not financially benefit Germany; that people of other nationalities commonly adopt similar practices; and that the freelance work is performed outside regular working hours and is therefore separate from the individual’s primary job.
From an Islamic perspective, does earning freelance income while residing in Germany and intentionally channeling it elsewhere to avoid local tax obligations affect the permissibility of that income?
Answer
Salaam
Thank you for reaching out with your query, which highlights an ethical and practical concern that many Muslims living abroad encounter. May God grant you clarity and bless you for your concern for halal earnings and supporting your family.
From an Islamic perspective, the fundamental principle is that a Muslim must adhere to the ethical and legal obligations of the country where they reside as a moral and contractual responsibility. When a Muslim chooses to live in a particular country, they implicitly agree to abide by its laws, including those related to taxation. Islam places great emphasis on fulfilling covenants and respecting the terms of agreements, as the Qur’an states:
“Fulfil your contracts because you shall be held accountable for contracts.” (17:34)
Tax evasion, whether done openly or covertly, involves breaching the law of the land. While it is true that you are not a German citizen, as a legal resident of Germany, you are bound by its financial regulations and tax system. If you earn money while residing in Germany, even as a freelancer, it will generally fall under German taxation laws, irrespective of where the income is deposited. Diverting that income to your home country with the intent of evading taxes is ethically problematic, as it involves deceit and violation of trust.
You have also mentioned some common rationalisations that people use to justify their actions. Let us address them.
- “I am bringing money to my own country; why should Germany benefit?” While the intent to support one’s home country economy is noble, the fact remains that the income is earned while living in Germany, utilizing the resources, infrastructure, and opportunities provided by that country. Paying taxes is a way of contributing to the societal framework that enables such opportunities.
- “Others from different nationalities do it, so why shouldn’t I?” The actions of others do not set the moral standard for a believer. As Muslims, we are guided by the ethical teachings of Islam, which emphasize honesty and accountability. The Prophet Muhammad (peace be upon him) said:
“The one who cheats is not of us.” (Muslim, Hadith 102)
- “This is additional freelance work outside my main job.” Even if this freelance work is outside one’s regular job hours, it still constitutes income earned while residing in Germany. Thus, it would likely be subject to its tax regulations, depending on the specific legal framework. Consulting a tax advisor to understand these obligations better is advisable.
Islam encourages earning a lawful livelihood (rizq-e-halal) and avoiding doubtful or impermissible means. If the income is generated through honest freelance work, it is permissible in essence. However, violating legal obligations such as tax laws makes the act unethical and, potentially, haram, as it conflicts with the Islamic principle of fulfilling agreements and avoiding dishonesty.
Please consider the following practical advice. If possible, seek the guidance of a professional tax consultant in Germany to fully understand your rights and obligations as a legal resident. Some countries provide allowances or exemptions for certain types of income, and there might be legitimate ways to manage your finances without violating the law. If a person wishes to contribute to his home country’s economy, he may consider legally sending a portion of his earnings there after fulfilling his obligations in Germany. This approach ensures that his income remains lawful both legally and ethically.
In conclusion, while the freelance income itself is permissible from an Islamic perspective, channeling it through means intended to evade taxes would render it impermissible. God has blessed us with ample opportunities and skills; trusting in Him and adhering to ethical practices will bring blessings (barakah) to our wealth and endeavours.
May God guide us to what is best and grant us success in this world and the hereafter.
Warm regards,
Mushfiq Sultan
