What consequences can arise from disregarding double taxation?
July 6, 2024 | 120,00 EUR | answered by Guido Hoffmann
Dear tax advisor,
my name is Friedhelm Lichtenberg and I am currently dealing with the topic of double taxation. I have some income from abroad and I am unsure of how to properly declare it in order to avoid double taxation.
My current situation is as follows: I have income from a foreign property that I rent out, as well as foreign capital gains. I have not included these income in my tax return so far, as I am not sure how to declare them correctly.
My concern is that by not taking into account double taxation, I may face tax consequences. I would like to know what potential effects double taxation could have on me and how I can avoid it.
Are there ways to avoid or at least minimize double taxation? Should I include the foreign income in my tax return, and if so, how exactly should I do it to avoid getting into tax legal troubles?
Thank you in advance for your support and advice.
Sincerely,
Friedhelm Lichtenberg
Dear Mr. Lichtenberg,
Thank you for your inquiry regarding double taxation. It is understandable that you are unsure about how to correctly declare your foreign income in order to avoid double taxation. I will now explain to you in detail the implications of double taxation and how you can avoid it.
Double taxation occurs when a taxpayer is required to pay taxes on their income in both their country of residence and in a foreign country. This can result in the income being taxed twice and leading to an unfair tax burden. To avoid this, most countries have entered into double taxation agreements, which ensure that income is only taxed in one country.
In your case, with income from a foreign property and foreign capital gains, it is important to declare these incomes in your tax return. You should declare the income correctly to avoid any tax consequences. Typically, you will need to report this income in the "Anlage AUS" section of your tax return and attach the corresponding foreign tax assessments.
There are various ways to avoid or minimize double taxation. One option is to take advantage of the provisions of the double taxation agreement between Germany and the relevant country. This can usually exempt you from double taxation. It is advisable to seek advice from an experienced tax advisor to consider all tax aspects.
In conclusion, it is important to correctly declare your foreign income in your tax return to avoid any tax consequences. Use the provisions of the double taxation agreement to avoid double taxation. If you have any further questions, please do not hesitate to contact me.
Sincerely,
Guido Hoffmann, Tax Advisor
