How can I as a freelancer avoid double taxation?
February 25, 2022 | 120,00 EUR | answered by Albrecht Schneider
Dear tax advisor,
I am Babette Otremka, a self-employed freelancer in the IT consulting sector. In recent years, I have been handling more projects abroad and have now realized that I am being taxed on my income by various countries. This leads to double taxation, as I have to pay taxes in both my country of residence and the country where the project work is done.
This double taxation is a financial burden for me and I am wondering if there are ways to avoid it. I want to ensure that I am not excessively taxed and that my income is not unnecessarily burdened. Are there any specific regulations or agreements between countries that could help me avoid double taxation?
I would be very grateful if you could provide me with possible solutions or strategies to optimize my tax situation. I would like to act legally and lawfully to save on taxes and avoid double taxation. Perhaps there are also specific tax exemptions or agreements that could help me as a freelancer in this situation.
I look forward to your professional advice and thank you in advance for your support.
Best regards,
Babette Otremka
Dear Mrs. Otremka,
Thank you for your inquiry regarding the double taxation of your income as a self-employed freelancer in the IT consulting sector. It is understandable that the burden of double taxation on your income presents a financial challenge. I would like to suggest some possible solutions to optimize your tax situation and avoid double taxation.
First of all, it is important to know that Germany has concluded double taxation agreements (DTAs) with many other countries to avoid double taxation. These agreements determine which country has the right to tax certain incomes and how a credit or exemption for taxes paid abroad can be granted. Therefore, it is advisable to check whether such agreements exist between Germany and the countries where you conduct projects.
Furthermore, it may be beneficial to explore the option of applying for an exemption from German tax on worldwide income. In this case, your income earned abroad would be exempt from German taxation if certain conditions are met. This option could help you avoid double taxation and reduce your tax burden.
Additionally, you may also consider implementing tax optimization by dividing your income among different companies or countries. However, caution should be exercised to avoid tax arrangements that violate laws.
It is advisable to seek advice from an experienced tax advisor specializing in international tax law in a personal consultation regarding your individual situation. Together, you can develop suitable solutions to optimize your tax situation and avoid double taxation.
I hope this information is helpful to you and I am available for further questions.
Sincerely,
Albrecht Schneider, Tax Advisor
