Are there any special regulations to avoid double taxation for digital services?
April 24, 2024 | 120,00 EUR | answered by Isabel Zimmermann
Dear tax advisor,
my name is Verena Rothwiller and I am a self-employed entrepreneur in the digital services sector. In recent months, I have received an increasing number of orders from abroad and have now been dealing with the issue of double taxation. In the process, I have encountered some uncertainties and hope that you can help me.
The current situation is as follows: Since my customers come from both domestic and foreign markets, I am wondering if there are specific regulations to avoid the double taxation of my income. I am concerned that due to different tax laws in different countries, I could be taxed twice, leading to significant financial losses.
My concerns lie in the fact that I am not sure how to correctly declare my income in order to comply with both German and foreign laws. I want to avoid having problems with the tax authorities later on and having to make unnecessary tax payments.
Therefore, my question to you is: Are there any special regulations or mechanisms that can help me avoid the double taxation of my digital services? What steps can I take to ensure that my income is correctly taxed and I do not suffer any financial disadvantages?
I thank you in advance for your support and look forward to your expert advice.
Best regards,
Verena Rothwiller
Dear Mrs. Rothwiller,
Thank you for your inquiry regarding double taxation in relation to your digital services. It is understandable that you are concerned about how to correctly tax your income to avoid possible financial disadvantages. I will now explain in detail the regulations and mechanisms available to avoid double taxation.
Firstly, it is important to know that double taxation of income between different countries is intended to be prevented through Double Taxation Agreements (DTAs). Germany has signed such agreements with many countries to ensure that income is not taxed twice. Therefore, it is advisable to check whether there is a DTA between Germany and the country from which your customers come.
In most cases, these agreements specify which country has the right to tax certain income. For example, if you provide digital services to customers from a country with which Germany has a DTA, it is usually determined that the income will only be taxed in one of the two countries. It is important to familiarize yourself with the specific provisions of the respective agreement to ensure that you fulfill your tax obligations correctly.
Additionally, there is also the possibility to offset the foreign tax already paid on your income in Germany. This is usually taken into account in the German income tax assessment. Therefore, you should collect all relevant documents and evidence of taxes already paid in other countries to potentially present them in your tax return.
It is also advisable to seek advice from an experienced tax advisor who is knowledgeable in international tax matters. A knowledgeable advisor can help analyze your tax situation, identify potential risks, and take appropriate measures to avoid double taxation.
I hope my information has been helpful and has clarified your questions regarding double taxation. If you need further assistance or have more questions, I am happy to help.
Sincerely,
Isabel Zimmermann, Tax Advisor
