is a secondary income double taxed?

7 posts in this topic

Hello TT,

 

I'm currently living and working in Berlin but I was thinking about opening a company in another EU country for a second income.

 

My question to this is as follows: do I need to declare this as a second income (and be subsequently taxed) even though the company would be subjected to tax in the other EU country (ie. will I be double taxed)?

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My understanding (as a non-expert) is that as a resident you must declare your worldwide income. Whether you are taxed on it directly depends on if the country in question has a double taxation agreement with Germany. If it is not taxable here directly, it may still put you into a higher tax bracket here. 

I expect a bit of googling will quickly find more specific info. for the country.

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4 minutes ago, Feierabend said:

My understanding (as a non-expert) is that as a resident you must declare your worldwide income. Whether you are taxed on it directly depends on if the country in question has a double taxation agreement with Germany. If it is not taxable here directly, it may still put you into a higher tax bracket here. 

I expect a bit of googling will quickly find more specific info. for the country.

I did a lot of googling and couldn't find anything specific yet, hence my post here.

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6 minutes ago, xcxvt said:

I did a lot of googling and couldn't find anything specific yet, hence my post here.

 

Google "Treaty for the avoidance of double taxation between the Federal Republic of Germany and [Mystery EU country]".

 

How do you even know that the income of the company you intend to open will be taxable in the other country? Most probably you'll find that the DTA says that the company profits are taxed where the directors are resident and the work takes place, not where the company is incorporated.

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there are more specific threads about financial matter/tax etc in this TT forum that would give you much more information about this but I concur with the comments already - yes you do need to pay tax on your worldwide income, meaning any income outside of Germany. If within the EU and depending on your tax bracket MwSt tax would apply as well. International tax responsibilities/reporting vary from country to country in respect of their individual law and joint tax inter country tax agreements. These days so much is transparent so not advisable to set up in another country to avoid taxes!

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I would highly suggest that you hire a tax advisor who specialises in tax law in Germany + other EU country, who then best advise you on how to set up your company and declare the income in both countries which will be most beneficial.

 

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