How can I as a freelancer avoid double taxation with international clients?
July 7, 2023 | 110,00 EUR | answered by Yvonne Schreiber
Dear Tax Advisor,
I am Felix Fröhlich, a freelance graphic designer, and I am faced with the challenge of avoiding double taxation with international clients. So far, I have mainly received orders from German clients, but lately I have been receiving more inquiries from clients abroad.
My current situation is as follows: When I accept a job from an international client, I not only have to pay taxes in Germany, but also in the client's country. This results in me having to give up a large part of my income in taxes and therefore making less profit.
My concerns are that the double taxation is causing me high costs and making my business less profitable. I would like to know what options are available to avoid double taxation and optimize my income.
Can you give me tips on how as a freelancer I can avoid double taxation with international clients? Are there any special tax regulations or agreements that can help me with this? I would be very grateful for your assistance on this matter.
Thank you in advance.
Sincerely,
Felix Fröhlich
Dear Mr. Fröhlich,
Thank you for your inquiry regarding double taxation on international clients as a freelance graphic designer. It is understandable that you are concerned about the high costs and lower profits due to this situation. I would be happy to provide you with some tips and information on how to avoid double taxation and optimize your income.
First and foremost, it is important to know that there are various ways to avoid double taxation. Double Taxation Agreements (DTAs) play an important role in this, as they are agreements between different countries to regulate the taxation of income earned in both countries. These agreements typically determine which country has the right to tax and to what extent income is taxed. As a freelance graphic designer, you should check if there is a DTA between Germany and the country of your international client, and how it regulates taxation.
Furthermore, you can try to obtain exemption from foreign taxation by proving that you have already paid taxes on the income in Germany. You may need to apply for an exemption from foreign tax and provide relevant evidence.
It may also be helpful to seek advice from a tax advisor or international tax law specialist to find individual solutions for your specific business model. An expert can help you optimize tax regulations and agreements to improve your tax situation.
Additionally, make sure to accurately document all income and expenses and report them properly in your tax return to take advantage of possible tax benefits or relief.
I hope these tips help you navigate the double taxation on international clients and optimize your income. If you have any further questions or need personalized advice, I am happy to assist.
Best regards,
Yvonne Schreiber
Tax Advisor
