What Is The Double Taxation Agreement

For example, the double taxation agreement with the United Kingdom provides for a period of 183 days in the German tax year (which corresponds to the calendar year); For example, a British citizen could work in Germany from September 1 to the following May 31 (9 months) and then apply to be exempt from German tax. Since double taxation treaties will protect the incomes of certain countries, 2. Increase tax security, reduce the risk of cross-border taxation If you are a resident of two countries at the same time or if you reside in a country that taxes your global income, and you have income and profits from another country (and that country taxes that income on the basis of, whether it comes from that country), you may have to tax on the same income in both countries. This is called “double taxation.” A DTA (double taxation agreement) may require that the tax be levied by the country of residence and exempt in the country where it originates. In other cases, the resident may pay a withholding tax in the country where the income was born and the taxpayer will receive a compensatory foreign tax credit in the country of residence to reflect the fact that the tax has already been paid. In the first case, the taxpayer (abroad) would declare himself a non-resident. In both cases, the Commission may provide for the two tax authorities to exchange information on such returns. Thanks to this communication between countries, they also have a better view of individuals and companies trying to avoid or evade taxes. .