Tax advisor in ... with tax advice: Int. Tax Law

German tax law is complicated enough, so why should you be interested in international tax law? Even as a private individual whose main residence is in Germany, questions about international tax law can arise if, for example, you have invested in foreign stocks. Another situation affects a large proportion of people who live near the German border and work abroad, or vice versa, who live abroad but work in Germany. Finally, international tax law is of enormous importance for large companies that have relocated part of their value chain to other countries or have many business relations abroad. Because tax law can vary greatly depending on the countries involved, it is helpful to get professional advice from a tax expert who specializes in international tax law.

Frequently asked questions in international tax law

There are basically three different cases in which international tax law must be applied: if you live in Germany but receive income from abroad; or vice versa, if you live abroad but receive income from Germany. The third case concerns companies that have at least partial relationships with foreign contractual partners or even have company locations abroad.

Taxation of foreign income in Germany

As a private individual, you may come into contact with international tax law because you earn foreign income. This does not only affect commuters in border regions who may be working. Income from capital investments is also included if you have invested your money in a foreign bank. Such a step can make sense for large assets in order to spread the risk, and some stock market products are also easier to trade abroad. This in itself is not a problem, but you must disclose income from foreign bank accounts and securities accounts in your tax return, regardless of whether or not there is a double taxation agreement. If you are interested in minimizing your personal tax burden on capital gains, it makes sense to discuss with a tax advisor which countries are particularly suitable for investing money in banks and stock exchanges from a tax perspective. Such tax advice for international income can also help to partially refund the double taxation in a tax return.

Tax liability for foreign residence

The reverse case, where you live outside of Germany but receive income from Germany, whether from bank accounts or stock portfolios or from work, also raises tax issues: which income is subject to tax; has withholding tax already been paid to settle your tax liability, or not? A tax advisor who specializes in international tax law will be able to help you here. Tax law also becomes complicated if you decide to give up your residence in Germany completely. It is important that this change of registration is carried out correctly so that you are no longer subject to tax in Germany. There are also pitfalls that can lead to departure taxation. If you are planning to move, contact a tax advisor who is familiar with such special cases as early as possible.

International tax law is particularly important for entrepreneurs

While private individuals already rely on the expertise of a tax advisor when it comes to questions about the taxation of foreign income, international tax law is even more important for entrepreneurs: large sums of money usually flow here, and in addition to services that are outsourced to foreign employees or subcontractors, goods flows and production locations must also be taken into account. In large corporations, many international tax questions relate to so-called transfer prices: these are used to appropriately price in regional differences in terms of taxation, wage levels and production costs. These transfer prices can improve comparability and provide better information about where exactly profits are actually generated in the company and where they must be taxed. If you use foreign services in your company or even have branches and production locations based abroad, you should definitely seek professional tax advice that specializes in international corporate law.

Relocation or expansion of the company abroad

Even if your company is currently limited to Germany but is growing due to increasing demand from abroad, you can already discuss with an international tax office how best to expand. From a commercial law perspective, it makes sense to differentiate between expansion into other EU countries and into third countries. Typical questions could be: does it make sense to set up a subsidiary based abroad for international business relations? How does the VAT calculation change for cross-border trade and contracts with foreign companies? And what do you have to tell the tax offices of the other countries involved? Even before a complete move or a spin-off of your company abroad, you may want to send employees abroad for a while to look after customers there, establish contacts with local companies or work with business partners on site. It is best to discuss early on what measures you need to take to avoid a double tax burden through taxes and social insurance for your posted employees.