Can tax agreements between countries protect me from double taxation?
October 22, 2023 | 120,00 EUR | answered by Guido Hoffmann
Dear tax advisor,
My name is Lucas Niemeyer and I work as a freelance software developer. In recent years, I have received more and more orders from abroad and have therefore been confronted with the issue of double taxation. I have heard that there are tax agreements between countries that aim to avoid double taxation.
My current situation is as follows: I already pay taxes in Germany on the income I earn here. Now the question arises whether I also have to pay taxes in the country from which my orders come. I am worried that I will end up being double taxed and suffer a significant financial loss as a result.
So my question to you is: Can tax agreements between countries protect me from double taxation? Are there any specific regulations or agreements that can help me avoid this issue? I would like to learn more about my options to ensure that I do not have to unnecessarily pay taxes.
Thank you in advance for your support.
Kind regards,
Lucas Niemeyer
Dear Mr. Niemeyer,
Thank you for your inquiry regarding double taxation. As a freelance software developer who receives orders from abroad, it is understandable that you are concerned about being double taxed in the end. Indeed, there are tax agreements between countries that aim to avoid double taxation and provide you as a taxpayer with protection.
Basically, there are two types of tax agreements that serve to avoid double taxation: the Double Taxation Agreement (DTA) and the Common Reporting Standard (CRS). The DTA determines in which country you must pay your taxes and in which country you are exempt from tax or receive a credit. It ensures that your income is not taxed twice.
To clarify your specific situation, you should check whether Germany has a DTA with the country from which you receive orders. In most cases, countries have entered into such agreements with each other to clearly regulate tax obligations and avoid double taxation. If a DTA exists, you should check whether there are specific provisions or agreements that cover your situation as a freelance software developer.
It is also important to note that you may need to provide, for example, a certificate of residency in Germany in order to benefit from the provisions of the DTA. It is advisable to seek advice from a tax expert to ensure that you take all necessary steps to avoid double taxation.
In conclusion, you can be protected from double taxation through tax agreements between countries. It is important to inform yourself about the specific regulations and agreements in your case and, if necessary, seek professional help to ensure that you do not have to pay unnecessary taxes.
I hope this information is helpful to you and I am happy to assist you if you have any further questions.
Best regards,
Guido Hoffmann
Tax Advisor
