How can I save taxes if I earn income in multiple countries?
August 27, 2023 | 120,00 EUR | answered by Guido Hoffmann
Dear tax advisor,
my name is Katja Sauer and I work as a freelance translator. In recent years, I have received an increasing number of orders from abroad, especially from Austria, Switzerland, and the USA. As a result, I am now earning income in multiple countries, which leads to double taxation.
Currently, I am unsure of how to optimize my taxes in order to avoid losing unnecessary money. I have already tried to inform myself about the applicable double taxation agreements between the different countries, but due to the complex regulations and exceptions, I am not sure how to proceed.
My main concern is to save taxes without violating any laws. I would like to know what options are available to reduce my tax burden and how I can benefit from the double taxation agreements. Are there any specific strategies or measures I can take to optimize my tax situation?
I look forward to your support and thank you in advance for your help.
Sincerely,
Katja Sauer
Dear Ms. Sauer,
Thank you for your inquiry regarding double taxation and how you can optimize your tax situation. It is understandable that as a freelance translator with income from different countries, you are facing a complex tax challenge. I would like to provide you with some tips and information that can help you reduce your tax burden and benefit from double taxation agreements.
First and foremost, it is important to carefully review the existing double taxation agreements between the countries where you earn income. These agreements are designed to prevent you from paying taxes on the same income in both countries. Typically, income is taxed in either the country of residence or the country where the income is generated, depending on the provisions of the relevant agreement.
One important measure to reduce your tax burden is the so-called credit method. This involves crediting the foreign taxes paid against the domestic income, so that you are not taxed twice. It is important to collect all relevant documentation and evidence of taxes paid abroad in order to apply for this credit.
Another way to optimize your tax situation is to choose the right tax classes and deductions in the different countries. In some cases, it may be beneficial to pay higher taxes on certain income in one country in order to take advantage of tax benefits in another country. It is advisable to seek advice from an experienced tax advisor to develop the best strategies for your individual situation.
It is also important to regularly review your tax situation and make adjustments as necessary to take advantage of current tax benefits and regulations. A good tax advisor can help you analyze your tax situation, find optimal solutions, and ensure that you make use of all possible tax benefits.
I hope this information helps you and provides an overview of how you can reduce your tax burden and benefit from double taxation agreements. If you have any further questions or require detailed advice, I am at your disposal.
Sincerely,
Guido Hoffmann
Tax Advisor
