Double taxation agreement

a double taxation agreement (DBA) - correct designation: Agreement for the avoidance of the double taxation - is an international-law contract between two states, in which one regulates, to which extent the Contracting States the taxation right for the income obtained in their territory is entitled. A DBA is to avoid that naturaland legal entities, who obtain an income in both states, in both states - doubles thus - to be taxed.

For the organization of the agreements, which are to prevent a double taxation, 4 principles are consulted:

To residents in the German Einkommensteuerrecht applies: Wohnsitzland and world income principle. To non--residents in the German Einkommensteuerrecht applies: Source land and principle of territoriality.

After the German income tax act is for example a natural person, who has its domicile in Germany and in Spain a savings account, with thatInterest from this savings account in principle in Germany taxable. The DBA with Spain regulates whether the interest may be taxed by Germany or Spain.

Around the double taxation to avoid there are several possibilities:

which method applicationfinds, is regulated in the respective double taxation agreement.

A goal of the double taxation agreements is the avoidance of the double taxation, not however causing a zero-taxation. Rather the principle of the a mark taxation is to remain protected.

In order to support the individual member states during the drawing up of their agreements (and also around double not taxations tooavoid) by experts of the OECD in irregular distances sample agreements are compiled. The comment appearing in addition is an important interpretation assistance with points of issue.

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