What measures can I take to reduce my tax burden from double taxation?
October 26, 2023 | 110,00 EUR | answered by Guido Hoffmann
Dear tax consultant,
I hope you can help me with my issue regarding double taxation. My name is Petra Bahr and I work as a self-employed graphic designer in Germany. Recently, I received a project from the USA that will significantly increase my income. Now I am worried that I will have to bear a high tax burden due to double taxation in both Germany and the USA.
Regarding the situation: My income from the project in the USA will be taxed there, as it is income from a source in that country. At the same time, I will also have to pay taxes in Germany, as I am a resident here. Double taxation means that I would have to pay taxes twice on the same income, which could significantly impact my financial situation.
I am now wondering what measures I can take to reduce my tax burden due to double taxation. Are there ways I can structure my income in a way that it is not subject to double taxation? Can tax agreements between Germany and the USA be applied to my advantage? Are there specific regulations or exemptions that I could take advantage of to reduce my tax burden?
I would greatly appreciate if you could provide me with your expertise and give me concrete recommendations on how to deal with double taxation. Thank you in advance for your help.
Dear Mrs. Bahr,
Thank you for your inquiry regarding the double taxation of your income from the USA as a self-employed graphic designer in Germany. Double taxation can indeed be a financial burden, but there are various measures you can take to reduce your tax burden.
First and foremost, it is important to know that Germany has concluded a double taxation agreement with the USA, which is designed to prevent income from being taxed twice. According to this agreement, your income will be taxed in the USA, but you can apply for a credit for these taxes already paid in Germany. This avoids the situation where you would actually have to pay taxes twice on the same income.
Another way to reduce your tax burden could be to avoid or minimize income in Germany that is also taxed in the USA. For example, you could consider whether it is possible to declare certain income as income from a foreign source, in order to only be taxed in the USA.
However, it is important that you seek advice from an experienced tax advisor who is knowledgeable about international tax issues. They can specifically advise you on the measures that are appropriate in your case and the tax implications of these measures.
In summary, the double taxation agreement between Germany and the USA provides opportunities to avoid or at least reduce double taxation. It is advisable to seek advice from an expert to find the optimal solution for you.
I hope that this information helps you and wish you success in dealing with your tax challenges.
Sincerely,
Guido Hoffmann
