How can I avoid having my income taxed in multiple countries?
March 26, 2023 | 125,00 EUR | answered by Albrecht Schneider
Dear Tax Consulting Experts,
My name is Anneliese Endres and I work as a freelance translator. In recent years, I have received an increasing number of orders from abroad and have become concerned about the taxation of my income. There is a possibility that my income may be taxed in both Germany and the countries where my orders originate, leading to double taxation, which I would like to avoid.
Currently, I have not taken any steps to address this potential double taxation. However, I am aware that there are various international tax agreements and regulations that can help me avoid such a situation. I am unsure, however, how to apply these regulations to my individual situation and what specific steps I need to take to optimize my tax burden.
Therefore, my question to you is: How can I avoid having my income taxed in multiple countries? Are there specific measures or agreements I can make to prevent double taxation? What concrete steps do I need to take to optimize my tax situation and ensure that I am not excessively taxed?
I thank you in advance for your help and advice on this matter.
Sincerely,
Anneliese Endres
Dear Mrs. Endres,
Thank you for your inquiry regarding the double taxation of your income as a freelance translator, resulting from assignments from abroad. It is understandable that you are concerned about potential double taxation and are looking for solutions to optimize your tax burden.
To avoid double taxation, there are various measures and regulations that can help you. First and foremost, it is important to check whether there is a double taxation agreement between Germany and the countries from which your assignments originate. These agreements determine which country has the right to tax your income, thus preventing your income from being fully taxed in both countries.
As a freelance translator, you may potentially benefit from the provisions of the OECD Model Tax Convention on Double Taxation Agreements. This agreement specifies how income is taxed in different countries and generally provides that the right to tax resides with the country of residence. This means that you should generally pay taxes on your income in Germany, unless there are specific provisions in the double taxation agreement with the country from which your assignments originate.
To ensure that you are not excessively taxed, it is advisable to seek the advice of an experienced tax advisor who is familiar with international tax issues. A tax advisor can analyze your individual situation and recommend specific steps to optimize your tax situation. They can assist you in applying the specific provisions of the double taxation agreement and, if necessary, negotiate with foreign tax authorities.
Overall, it is important to take early action to avoid double taxation and optimize your tax situation. An experienced tax advisor can help you take the right steps and ensure that you are not excessively taxed.
I hope this information is helpful to you and I am available to answer any further questions you may have.
Sincerely,
Albrecht Schneider
