How Do You Know if You Were Double Taxed

Terminal checked: 21/09/2021

Double taxation

There is a risk that your income may be taxed twice if ii countries take the right to tax your income considering, for instance:

• Y'all live in i EU country only piece of work in another (cantankerous-edge commuter)
• Yous are posted abroad for a short consignment
• You are living and looking for work abroad and have transferred unemployment benefits from your dwelling house land
• You lot accept retired to one country and receive a alimony from another

In these situations, while you will always exist subject area to the tax rules of your country of residence, yous may also have to pay taxes in the other country.

Fortunately, still, most countries accept double tax agreements . These agreements usually spare you from double taxation:

• under many bilateral tax agreements, the corporeality of tax you paid in the country where y'all piece of work will be showtime against the revenue enhancement y'all owe in your country of residence
• in other cases, the income earned in the state where you work might exist taxable but in that country and exempt from taxation in your country of residence

You should note that the tax rates in the two countries involved will almost probable be unlike. If the tax charge per unit in the country where you work is higher, that is the final rate you volition pay - even if the tax paid in that country is offset confronting the tax due in your state of residence, or if your country of residence exempts you from any farther revenue enhancement.

In social club to merits relief from double taxation, you may need to prove where you are resident and that y'all have already paid taxes on your income. Bank check with the taxation authorities what proof and which documents you demand to submit.

Alert

All Eu countries regularly exchange tax data to ensure taxpayers run into their obligations and to combat tax fraud and tax evasion.

The information below describes the about common double tax treaty rules, in line with the OECD model tax convention; please bank check the details of the taxation treaty relevant to your state of affairs.

What rules apply if y'all are:

A cantankerous-edge commuter

If you lot live in one EU land and piece of work in another, the taxation rules applicative to your income will depend on national laws and double taxation agreements between these two countries - and rules tin differ considerably from those that determine which country is in charge of social security issues.

Depending on the double tax agreement , y'all may have to pay taxes in your country of work as well as in your country of residence:

If you lot are an employee, the land where you work will, in nigh cases, taxation the income you earn on its territory.

If you are self-employed and registered equally such in the country where you alive only provide services across the border, you lot will generally have to pay income tax in the country where you provide services if y'all set a 'stock-still base of operations' or 'permanent establishment' (such as an role or a shop) there. Cheque with the revenue enhancement authorities which rules apply to your case.

If y'all alive in i EU land only earn all or virtually all of your income in another and pay taxation there, the country where you earn your income should treat you as it would treat a resident - that is, it should requite you the same tax reliefs and taxation exemptions and any other tax benefits available to residents, such as personal allowances, or the possibility to complete a joint tax return with your spouse.

The European employment services' cross-edge partnerships in your region volition exist able to help you lot find out if at that place are whatever special taxation arrangements in place for cross-border commuters that would apply to you.

A worker posted abroad

If y'all are posted away for a short consignment (up to 2 years), you will remain nether your habitation state's social security organization. Yet, the income earned during a posting away may be taxed in the host land.

When posted abroad by your company, you may not accept to pay tax in the state where you work on the income you earn during your posting if:

• Y'all stay abroad for less than 6 months in a twelvemonth and
• Your salary is paid directly by your employer (at home), rather than by a co-operative or other company your employer has in the country where you piece of work

A company director or lath member

If y'all live in one country and are a member of the management board of a company in another, the country where the company is located may taxation fees and income related to this role.

European union countries may treat as part of your fees whatsoever benefits in kind (for example stock options or visitor car) that you receive as a lath member.

If, alongside your part as a board member, you work for the same company every bit an adviser, a consultant or an ordinary employee, your income from these functions volition about probable be subject to the same taxation handling equally that applied to other cross-edge commuters (see higher up).

An employee working in one Eu country for a company based in another

If you live in i EU country and work there for a company based in another Eu country you will normally, under most tax treaties, be subject to tax only in your state of residence.

A mobile artist or sports professional

When you work in another European union state - outside the EU country where y'all're tax resident - as an entertainer (such as a musician, theatre, film, radio or television creative person) or as a sports professional, income you receive can exist taxed in the country where the money was earned. This may be the case even if you're paid indirectly via another person or a company (such every bit a direction visitor, squad, troupe or orchestra).

The length of your stay abroad, and whether or non y'all take a fixed base there are oft not taken into account: the decisive element is the functioning in the country.

All the same, if the functioning or event is exclusively or mainly supported by public funds or if the coin you earned is insignificant, some countries will non tax your income. Your income will, still, will nevertheless be subject to the tax rules of your dwelling house country (the country where you are tax resident).

Your home state will oft either:

• exempt from taxation the money you earned from performances or events in another EU country, or
• grant you tax relief for any income taxation paid at source in the country where yous earned the money

To claim a tax refund or tax relief in the state where you live, you will probably have to show some documents proving that you paid revenue enhancement on the income you earned away. Y'all may demand to provide sworn translations of any official documents used to support your claim.

A civil retainer away

If you are seconded to work abroad as a civil retainer, or if you live in one EU country merely work as a civil retainer in another, the following conditions usually utilise:

• you will go along to pay taxation on the income from your civil retainer task simply in the country of the administration that employs you
• you lot will pay income taxation but in the state where you work if you are resident there and
  • yous are a national of that land or
  • y'all did not move in that location just for the purpose of working every bit a civil servant (for instance you were already living in that location earlier being recruited as a civil servant).

An unemployed person looking for work away

If you spend a short menstruum (less than 6 months a year) in another EU country without working there, yous probably won't exist considered a resident for revenue enhancement purposes in that country. In that instance, whatsoever transferred unemployment benefits should exist taxed merely in the country that pays them.

If yous spend more than 6 months in a year in some other EU land, you could be considered tax-resident of that country and unemployment benefits transferred from another country may be taxed there. Indeed, under many bilateral tax agreements, unemployment benefits are subject to taxation only in the country of tax residence.

Warning

However, if you continue a permanent home and strong personal and economic ties with your home land, you could still exist considered a revenue enhancement-resident of your home country, even if you stay abroad for more than six months. In this case, the other EU country may not exist entitled to tax your unemployment benefits

A retired person abroad

If you take retired to another EU country and spend more than than half dozen months a year there, that state may consider yous a tax-resident. If so, you may have to pay tax to that state on your full worldwide income - including pensions you receive from other EU countries.

Exception: public sector pensions are usually taxed merely in the country of the administration that employed you.

Sources yous should check

This is only a summary of what unremarkably happens. To find out what the rules are in your case:

manningchately.blogspot.com

Source: https://europa.eu/youreurope/citizens/work/taxes/double-taxation/index_en.htm

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