What conditions must be met in order to benefit from a double taxation agreement?
March 11, 2024 | 120,00 EUR | answered by Isabel Zimmermann
Dear tax advisor,
My name is Paula Hohenwarter and I am currently in a situation where I may be affected by double taxation. I work in Germany, but I am tax resident in Austria, as I have my main residence there. Due to this cross-border activity, I am concerned that I may have to pay taxes twice - both in Germany and in Austria.
Therefore, my question is: What are the requirements to benefit from a double taxation agreement between Germany and Austria? I want to ensure that I am not unfairly burdened and that my income is not taxed twice.
I am aware that double taxation agreements are concluded between different countries to avoid such situations. However, I am unsure whether I am eligible for these agreements and what specific conditions need to be met for me to benefit from relief.
I would be very grateful if you could explain to me the requirements and possible solutions in case of double taxation between Germany and Austria. Your expertise and support in this matter would be of great help to me.
Thank you in advance for your assistance.
Sincerely,
Paula Hohenwarter
Dear Mrs. Hohenwarter,
Thank you for your inquiry regarding the possible double taxation in your case as a cross-border commuter between Germany and Austria. It is understandable that you are concerned about having to pay taxes twice and are therefore looking for a solution to avoid this.
In order to benefit from a double taxation agreement between Germany and Austria, certain conditions must be met. Typically, such an agreement provides that the right to tax income earned in one of the two countries belongs to the taxpayer's country of residence. This means that as a taxpayer in Austria, you would generally have to pay taxes on your entire worldwide income in Austria. In this case, Germany would relinquish the right to tax your income earned in Germany.
Another important point is that as a cross-border commuter, you may be able to take advantage of a special provision to avoid double taxation. Typically, your tax situation is determined by the so-called 183-day criterion. This means that as a cross-border commuter, you must not work in the country where you perform your activities for more than 183 days a year in order to be subject to taxation there. If you meet this requirement, you can generally benefit from tax relief.
It is important that you carefully review your tax situation and seek professional help if necessary to ensure that you can benefit from the advantages of a double taxation agreement or a special provision for cross-border commuters. A tax advisor can assist you and provide you with concrete solutions to avoid double taxation.
I hope that this information is helpful to you and gives you an initial overview of possible solutions in your case. If you have any further questions, I am happy to assist you.
Best regards,
Isabel Zimmermann
