Double taxation treaty between Germany and the United States of America  (DBA-USA)

The double taxation treaty between Germany and the United States of America  (DBA-USA) is not only one of the most complicated double taxation treaties that Germany has concluded with other countries to date, but also allows double taxation of some income, paradoxical as it may sound.

Double taxation is possible because of the so-called “Saving Clause” in accordance with Article 1 paragraph 4 letter a DBA-USA. According to this, the USA reserves the right to tax some income of US citizens based on their US citizenship, regardless of the fact that Germany has the right to tax the same income in accordance with the provisions of DBA-USA. However, DBA-USA does not contain a corresponding reservation from Germany’s perspective. The Saving Clause applies primarily to US citizens who are staying in Germany temporarily but not for a short period of time for professional or business reasons.

Double taxation due to the Saving Clause can affect such income as interest, income from employment, pensions, supervisory board remuneration, other income, etc.

However, DBA-USA is not that unfair. To avoid or rather eliminate double taxation due to the Saving Clause, DBA-USA contains a special multi-step crediting method. This allows US citizens to refund overpaid taxes.

In order to offset taxes paid in both countries and to arrange for the refund of taxes that have been overpaid, we recommend that US citizens who plan a non-short-term professional or business stay in Germany speak to their US tax advisor about the points outlined above. For these reasons, we also recommend that such US citizens find a tax advisor in Germany at an early stage. Of course we are happy to offer our assistance.

Vadym Ponomarenko | TLI Steuerberater

TLI Steuerberater named “Best Employers – Tax Consultants 2024” in the trade journal (Handelsblatt)

We are pleased that we were named “Best Employers – Working Conditions for Tax Consultants 2024” in the current trade journal (Handelsblatt) ranking. This award as one of the best employers of 2024 in the tax consulting industry (category up to 50 employees) is recognition for our company and our corporate culture.

The award as one of the best employers in the tax industry is not only proof of the quality of our services, but above all of the tireless commitment and team spirit of our employees. We are continually committed to creating a positive and supportive work environment where each individual can achieve their full potential.

At TLI Steuerberater, we place great value on creating a positive and supportive work environment in which each individual achieves their full potential. This prestigious recognition reflects our commitment to outstanding working conditions and team collaboration.

A big thank you to our fantastic team for their tireless effort and dedication. Together we create a work culture that is not only successful, but also brings joy and satisfaction to everyday work.

If you would like to become part of a successful team in a corporate culture that is based on excellence and collaboration, then apply to us.

We are looking for committed talents who would like to work with us to create a positive working environment.

You can find more information about TLI Steuerberater and current career opportunities under Career.

We look forward to a successful future together!

One step more modern – Germany is changing cross-border commuter regulations in the double taxation agreement with Austria

On August 21, 2023, Austria and Germany signed an amendment protocol to the double taxation agreement (DTA). The change log mainly contains adjustments with regard to the cross-border commuter regulation and the associated use of home office opportunities. The aim of the change protocol is to adapt the DTA to the new and “modern” challenges of the working world.

In our article from June 14, 2023 you will find everything you need to know about the legal status of the cross-border commuter regulation before the change protocol.

Go to article: The cross-border workers regulation in the double taxation treaty (DTT) Germany Austria

The change protocol is intended to allow taxpayers to meet the requirements for cross-border commuter status as soon as they work in the border zone and have their main residence there. The daily return trip across the border is no longer necessary. The border zone is currently still 30 km.

In view of the cross-border commuter regulation, days in the home office are no longer counted as harmful days of “non-return”. In addition, the cross-border commuter regulation was also extended to employees in the public sector.

The new cross-border commuter regulation will apply from January 1, 2024.

It remains to be seen which other double taxation agreements with neighboring countries will be changed in this regard. In addition to Austria, Switzerland has also signed an amendment protocol that will come into force on January 1st, 2025.

Hannes Hellfeuer | TLI Steuerberater

The cross-border workers regulation in the double taxation treaty (DTT) Germany Austria

As an employee, according to Art. 15 Para. 1 DBA Austria, the remuneration from dependent work is to be taxed exclusively in the country of residence of the employee. If the activity is actually physically performed in the other country, the other country has the right to tax the remuneration.

However, according to Art. 15 Para. 2 – 6  DTA Austria, this basic rule can be deviated from. An exception is the application of the so-called cross-border workers regulation according to Art. 15 Para. 6 DBA-Austria.

Two conditions must be met for the application of the cross-border workers regulation:

On the one hand, both the place of residence and the place of work must be within the border zone. This border strip covers 30 km along the border, based on the straight line. (cf. Consultation Agreement Germany – Austria of 08/24/2000, BStBl. I 2010, p. 645).

On the other hand, the cross-border worker hast to return daily from his place of work to his place of residence (cf. Art. 15 Para. 6 No. 2 DBA Austria), whereby it is not detrimental to the application of the regulation if the taxpayer has no more than 45 working days (based on a entire calendar year) does not return to his place of residence or does so outside of his work for his employer (e.g. due to a business trip to a third country; cf. Consultation Agreement Germany – Austria of 08/24/2000, BStBl. I 2010, p. 645).

The following days are not to be taken into account in the case of non-return (“45-day limit”):

  • Holidays,
  • Sick days,
  • Parental leave/maternity leave and
  • Working days in the home office (so-called teleworking), provided that the working days have been spent in the home office due to the measures taken as part of the corona pandemic. The home office days only apply in the period from March 11, 2020 to June 30, 2022, not on the days of non-return (cf. consultation agreement Germany – Austria of March 28/29, 2022, BMF of April 4 2022, IV B 3 – S 1301-AU/19/10006:005).

Outside of the above mentioned period (March 11, 2020 – June 30, 2022), home office days count towards the number of days of non-return (“45-day limit”), since the daily border crossing does not take place (cf. Consultation Agreement Germany – Austria of 08/24/2000, Federal Tax Gazette I 2010, p. 645).

For the assessment years 2020 and 2021, income from employment is mainly taxed in the country of residence. The possibility of using the home office was retained by most companies in Germany and Austria. Since the simplification regulation for working from home expired on June 30, 2022, days in the home office will again be considered days of non-return as part of the cross-border workers regulation from July 1, 2022. If the 45-day limit is exceeded over the calendar year, the cross-border workers regulation is ultimately not applicable. The taxation right is to be divided into the total working days based on the days of activity in Germany and in Austria.

It remains to be seen whether fundamental adjustments will be made to the double taxation treaty on the subject of working from home. In order to keep cross-border activities of employees up to date, especially within the EU, a change to this effect would be essential.

Hannes Hellfeuer | TLI Steuerberater

Taxability of profits from the sale of various cryptocurrencies under review of the Federal Fiscal Court

For the first time, the Federal Fiscal Court (BFH) had to deal with the taxation of cryptocurrencies (BFH of February 14, 2023 – IX R 3/22). The previous judgment of the Cologne Finance Court (of November 25, 2021 – 14 K 1178/20), according to which profits from the sale of cryptocurrencies are private sales transactions in accordance with Section 23 (1) sentence 1 of the German Income Tax Code (EStG) the BFH has confirmed.

In the underlying facts, the plaintiff had acquired various cryptocurrencies (including Bitcoin, Ethereum, Monero) in several transactions between 2014 and 2017. He made a profit of 3.4 million euros from the sale in 2017 and also declared this in the income tax declaration. The responsible tax office assessed both the profits from the sale of cryptocurrencies for euros and the exchange of cryptocurrencies among themselves as private sales transactions subject to income tax. In the first instance, the Cologne Financial Court followed the opinion of the tax office, whereas the plaintiff filed an appeal because the Financial Court Cologne did not differentiate between the properties of the individual cryptocurrencies. In the current judgment, the BFH has now rejected the appeal as unfounded, since no differentiation is necessary when assessing the economic property of the cryptocurrencies at hand. According to the BFH, cryptocurrencies are “other economic goods”, according to which they qualify as private sales transactions for income tax purposes in accordance with Section 23 (1) sentence 1 no. 2 EStG if they are purchased and resold within one year. It is irrelevant for the qualification whether these are exchanged for other crypto currencies or sold for fiat currencies within the year. What was previously largely a consensus in the tax world has now been clarified by the BFH as a supreme court.

With this first judgement by the BFH on cryptocurrencies, it is now clear that the highest financial court ruling regards cryptocurrencies as economic goods and the sale of these within the one-year period is subject to income tax.

Dominik Becherer | TLI Steuerberater

Tax audit: How justified is the fear of an tax audit?

Let’s start with a statistic: Of the approx. 8.5 million companies in Germany, around 150,000 companies were last checked by the tax authorities. This corresponds to a rounded rate of just 1.8%.

The number initially gives little cause for concern. However, this would be too easy, because the larger the company, the higher the probability of being audited. According to the statistics recently published by the Federal Ministry of Finance on the results of tax audits, the audit rate for large companies is 17.1%. A total of 13,000 examiners were recently deployed. These determined additional tax revenue of 13.1 billion euros. In addition, the statistics published by the Federal Ministry of Finance only include so-called “real” tax audits. In addition to these “real” tax audits, however, there are numerous other audits that are recorded in isolated statistics. These facts and figures are cause for concern, aren’t they? Even if the probability of a real tax audit does not seem that high, you should be prepared for an audit. My experience as a tax consultant, with a focus on corporate taxes, the next tax audit will definitely come.

You can find my full column on tax auditing here.

Christian Dobner | TLI Steuerberater

Property tax: Bavaria extends the deadline until the end of April

Would you like a riddle? What does the property tax deadline have to do with a patchwork quilt?

Unfortunately far too much.

After almost a third of property owners either slept through or ignored yesterday’s deadline for submitting property tax returns, there is disagreement in the countries: play the strong state, including the threat of late payment penalties and penalties? Or turn a blind eye again?

In Bavaria, they opted for the second option and extended the deadline by three months. Landowners in other countries are now shouting “unjust!” because the reminder printers are already running at full speed here.

Other countries should follow Bavaria’s initiative. That is the only reasonable consequence of the fact that hundreds of thousands of property tax returns are still missing. Anyway, one thing is certain: the principle of subsidiarity remains a piñata – and the property tax fiasco an ugly patchwork quilt.

Go to Article: Bavaria extends deadline for filing property tax returns

Christian Dobner | TLI Steuerberater

Federal Fiscal Court dismisses lawsuit against solidarity surcharge

The solidarity surcharge is unconstitutional. That should have been today’s headline. Unfortunately, the Federal Fiscal Court decided the opposite in a despondent judgment today. Because the solidarity surcharge is not tied to the Solidarity Pact II, which expired in 2019. And because the federal government also had financial requirements in 2020 and 2021 due to reunification.

Politicians in particular will be happy about this, as they publicly argue about the pros and cons of a tax on the wealthy, even though they have long been de facto levying it with the solidarity surcharge. True to the motto: old tax, good tax. New tax, bad tax.

Go to Article: Federal Fiscal Court – lawsuit against solidarity surcharge dismissed

Christian Dobner | TLI Steuerberater

Tax-saving models abroad – is it really worth it?

Panama, Luxembourg, Cyprus: For a long time, so-called tax havens were only reserved for wealthy people. In the meantime, more and more providers are advertising foreign tax-saving models at dumping prices. But how serious is tax avoidance as a mass product?

Whether tax flight abroad is morally justified is certainly open to debate. In fact, such tax-saving models are by no means worthwhile for everyone. On the contrary: if you get bad advice, you can quickly suffer economic damage. In my new column for ZASTER you can find out who can save taxes abroad and who should refrain from shifting their tax affairs abroad.

Christian Dobner | TLI Steuerberater

Taxes: fair or unfair?

The question of more fair taxation is one of the Germans’ favorite hot topics: some are calling for tax cuts, while others are calling for even greater redistribution.

I think that taxes are an effective steering tool and are not unfair per se. In my first column for the financial magazine ZASTER, however, I am in favor of clear limits if we do not want to jeopardize our prosperity.

From now on, as a columnist for ZASTER magazine, I will regularly take a look at tax and financial topics and classify them for you from my perspective as a tax consultant and entrepreneur.

You can find my full column on fair taxation here.

Christian Dobner | TLI Steuerberater

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