Double taxation agreement

A double taxation agreement (DBA) - correct name: Agreement for the avoidance of double taxation - is an international agreement between states that regulates the extent to which a state has the right to tax for the income generated in one of the two contracting states or for that in one of the two Contracting States are entitled to documented assets. A DTA is intended to prevent natural or legal persons who earn income abroad from being taxed both by the country of residence (country of residence or domicile) and by the source country (country in which the income is generated) (avoidance of double taxation ). Special agreements exist on the income and assets of shipping and aviation companies.

There are also agreements in the field of administrative assistance and the exchange of information , which have recently come into the political focus in the course of the discussion on tax havens, tax avoidance and tax evasion . These agreements regulate the basis and scope of the intergovernmental exchange of information for taxation purposes. In addition to income tax law, there are also agreements in the field of inheritance and gift taxes and agreements in the field of motor vehicle tax .

In certain cases, so-called white income occurs because the terms used in double taxation agreements are interpreted according to the respective national understanding and the legal systems concerned are not harmonized. In these cases there is no taxation - regularly against the legislative will - in both states. In more recent agreements, white income is increasingly avoided through so-called fallback clauses, according to which subsidiary taxation is carried out by the country of residence (see subject-to-tax clause ).

If there is no double taxation agreement between the states concerned, avoidance of double taxation is based on the provisions of the respective domestic law. Within the European Union , the double taxation agreements are overlaid by the overriding EU law, in particular primary EU law , the provisions of the EU treaty and, in particular, the fundamental freedoms .

Principles

In the practice of international tax law, i. H. The taxation of cross-border issues by the sovereign individual states is usually based on the following principles, which are then also the starting points of the agreement policy:

• Country of residence principle : A person is taxable in the state in which he or she is domiciled or has his habitual residence . In the case of a legal person, the place of business management takes the place of residence.
• Source country principle : a person is taxable in the state from which their income originates.
• World income principle : The taxpayer is taxed in the country of residence with his world income.
• Territorial principle : The taxpayer is assessed in the source country only with the income that he has earned on the territory of the country concerned.

Model agreement

OECD experts develop model agreements (OECD-MA) at irregular intervals. The last revision was decided on in November 2017 and published on December 18, 2017. The comment published on the model agreement can in part be used to interpret agreements that have actually been concluded. The model agreement developed by the United Nations is a model for negotiating double taxation agreements between industrialized and developing countries . The Federal Ministry of Finance has published its own negotiating basis for double taxation agreements in the area of ​​taxes on income and assets.

The United States of America also has its own model convention.

The member states of the European Union generally use the OECD model convention for renegotiations.

Situation in Germany

Basic structure

For natural persons with unlimited tax liability, i. H. those with domicile or habitual abode in Germany ( Section 1 (1) EStG), the principle of country of residence and the world income principle apply in German income tax law . This means, first of all, that the entire income earned anywhere in the world of a natural person who is domiciled or habitually resident in Germany is taxable in Germany.

For natural persons who have neither a domicile nor their habitual abode in Germany ( Section 1 (4) EStG), the source country principle and the territoriality principle apply in German income tax law .

A person with unlimited tax liability in Germany is therefore taxable in Germany on his income from foreign sources. For example, B. the interest from a capital investment abroad is also subject to taxation in Germany. However, if the foreign state subjects this interest to taxation, it is the task of a double taxation agreement to avoid or reduce double taxation.

Two standard methods are used for this:

• Exemption method (possibly including the progression reservation ); in this case, the foreign income is excluded from domestic taxation
• Credit method ; In this case, the income is taxed in both countries, but the country of residence offsets the tax levied abroad on its tax, i.e. H. reduces its tax burden by the tax already levied abroad.

With the exemption method, the tax level of the other contracting state remains, with the credit method the German tax burden level is established (in total).

Two further methods, which are to be regarded as subcases of the credit method, merely ensure a reduction in double taxation:

• Generalization method
• Deduction method , cf. also Section 34c Paragraphs 2 and 3 EStG.

In addition, there is the possibility of the tax on income that has already been taxed in the source country being waived by the country of residence (cf. § 34c (5) EStG).

Relationship to national law / treaty override

→ Main article : Treaty override

According to § 2 AO , international treaties take precedence over national tax laws if the treaties have become domestic law through transformation or consent law (cf. Art. 59 (2 ) GG ). Nonetheless, the legislature tries to exclude certain legal consequences of double taxation agreements through special national regulations. This legal exclusion of double taxation agreements is known as a treaty override (in German, for example: "contract override "). The Federal Constitutional Court basically affirms the compatibility of a treaty override with the Basic Law.

Examples of a treaty override are:

• Section 50d (10) EStG : Among other things, the provision is intended to prevent interest that shareholdersreceivefrom their partnership, which according to national law does not constitute income from capital , but rather income from commercial operations , from being treated as interest under the DTA. The background to this is that many DTAs provide no or only a reduced right to tax interest income.

• Section 50i EStG : The provision is intended to ensure that certain sales processes - contrary to DTA regulations - are assigned to the business area. The background is tax arrangements that were accepted by the tax authorities because they mistakenly saw only a tax deferral effect. According to a ruling by the Federal Fiscal Court , however, there was a risk of final tax losses.

Agreement status

Over the years, Germany has created an extensive network of double taxation agreements. The current status of the agreement at the beginning of each calendar year, including the status of the current agreement negotiations, is published by the Federal Ministry of Finance in January. In the specific application, the temporal applicability of the relevant DTA or any amendment agreements and, if applicable, individual provisions of the agreement must be determined.

Situation in Switzerland

Switzerland has concluded 108 double taxation agreements. The existing savings tax agreement with the EU is also important .

In 2003, Switzerland made concessions to the OECD in order not to be placed on a “black list” of tax havens . Since then, when revising the double taxation agreement, Switzerland has been obliged to grant the OECD member states, among other things, great administrative assistance for holding companies within the meaning of Article 28 (2) StHG. Twelve corresponding agreements are required so that Switzerland is removed from the OECD's “gray list” of those states that have so far only promised cooperation on tax issues. In July 2009, Switzerland had signed or initialed 12 DTAs with Denmark, Luxembourg, Norway, France, Mexico, the USA, Japan, the Netherlands, Poland, Great Britain, Austria and Finland . On February 5, 2015, the new double taxation agreement with the Principality of Liechtenstein was initialed.

literature

• Wassermeyer: Double taxation loose-leaf commentary, 62nd edition, 138th supplementary delivery, Munich 2017 (as of July 2017), Verlag CH Beck, ISBN 978-3-406-67764-9
• Vogel / Lehner, double taxation agreement, 6th edition 2015, Verlag CH Beck, ISBN 978-3-406-64929-5
• Frotscher, Internationales Steuerrecht, 4th edition 2015, CH Beck, ISBN 978-3-406-67870-7
• Rupp / Knies, International Tax Law, 3rd edition 2014, Verlag Schäffer-Poeschel, ISBN 978-3-7910-3127-9
• Wilke / Weber, Textbook International Tax Law, 13th edition, 2016, NWB-Verlag, ISBN 978-3-482-63963-0 .

Web links

• German DBA
• Austrian DBA
• Swiss DBA
• OECD website on the subject

Individual evidence

1. ^ OECD Council approves the 2017 update to the OECD Model Tax Convention. OECD , November 23, 2017, accessed April 25, 2020 . 
2. ↑ Model Tax Convention on Income and on Capital: Condensed Version 2017. OECD , December 18, 2017, accessed April 25, 2020 (DOI: https://doi.org/10.1787/mtc_cond-2017-en ). 
3. ↑ [1]
4. ↑ BMF April 17, 2013 IV B 2 - S 1301/10 / 10022-32, letter regarding the basis for negotiation for double taxation agreements in the area of ​​taxes on income and assets, BeckOnline BeckVerw 271189
5. ↑ [2]
6. ↑ Decision of December 15, 2015 - 2 BvL 1/12 . Retrieved April 24, 2016.
7. ↑ BR-Drs. 139/13, page 142
8. ↑ Federal Ministry of Finance: Status of double taxation agreements and other agreements in the tax area as well as agreement negotiations on January 1, 2019
9. ↑ Double taxation agreement - a challenge for Switzerland
10. ↑ Twelfth double taxation agreement according to the OECD standard initialed ( memento from January 23, 2010 in the Internet Archive ) handelszeitung.ch July 23, 2009
11. ↑ Double taxation agreement between the Principality of Liechtenstein and Switzerland initialed Government of the Principality of Liechtenstein, February 5, 2015.

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