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Ask a tax advisor on the topic of Double taxation

Do I have to pay taxes in both countries if I work abroad?

Dear tax advisor,

my name is Marcus Eiserfelder and I am currently working abroad. I have heard that there may be issues with double taxation and therefore I am somewhat concerned.

The situation is as follows: I am a German citizen and have been working in Austria for several months. My employment contract is for the next three years and I spend most of the year in Austria. However, I still receive my income from Germany. Now I am wondering if I have to pay taxes in both countries, as I have kept my residence in Germany but earn the majority of my income in Austria.

My concerns are that I may be double taxed and could suffer financial losses as a result. I have tried to gather information on the internet, but the information there is often contradictory and confusing.

Therefore, my question to you as an expert in tax matters: Do I have to pay taxes in both countries when working abroad? Are there possible solutions to avoid or at least minimize double taxation? I would greatly appreciate it if you could assist me in this matter.

Sincerely,
Marcus Eiserfelder

Isabel Zimmermann

Dear Mr. Eiserfelder,

Thank you for your inquiry regarding double taxation as a German citizen working in Austria. The issue of double taxation can indeed lead to problems, and it is important to take appropriate measures to avoid financial losses.

In your case, as a German citizen working in Austria, you are generally subject to taxation in both countries, as Germany follows the principle of worldwide income and Austria applies the principle of territoriality. This means that you must pay taxes on your worldwide income in Germany, while Austria taxes your income from Austrian sources.

However, there are international agreements aimed at avoiding double taxation. In your case, the Double Taxation Agreement (DTA) between Germany and Austria is relevant. This agreement determines which country has the right to tax certain income and what measures can be taken to avoid double taxation.

Taking the DTA into account, for example, it may be possible for you to claim tax exemptions or reductions in Germany to reduce the tax burden. Additionally, you have the option to apply for a credit for the taxes paid in Austria on your German tax to avoid double taxation.

It is advisable to consult with a specialized tax advisor or financial expert to analyze your individual situation and take appropriate measures to avoid double taxation. The tax advisor can assist you in compiling all relevant documents, filing applications, and ensuring that you fully benefit from the tax advantages of the DTA.

In conclusion, it is important to carefully observe the tax regulations and agreements between Germany and Austria to avoid potential issues related to double taxation. I hope that my information is helpful to you and I am available for any further questions you may have.

Sincerely,
Isabel Zimmermann

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Isabel Zimmermann