Tax treaty

A double taxation agreement (DTA ) - correct name: Agreement for the avoidance of double taxation - is an international treaty between two States is governed by the extent to which the right to tax a state for the progress in one of the two Contracting States income or for a of the two Contracting State is entitled to immovable assets. A DTA is to prevent natural or legal persons who earn income in two states in two countries - will be taxed - so twice. Special agreements exist concerning income and assets of shipping and aviation companies. The aim of such agreements is not to allow so-called to " white income ", ie - To have untaxed income in both Contracting States, but to avoid that once income earned not by both Parties in each case - - contrary to the other provisions of domestic law of the Contracting States shall be taxable - and under their laws.

There are moreover agreements in the field of mutual assistance and the exchange of information, which came in the wake of the current debate on tax havens, tax avoidance and evasion in the political focus. In these agreements, the foundations and the scope of intergovernmental information exchange are regulated for purposes of taxation. Outside of the income tax law also has signed agreements in the field of inheritance and gift taxes, as well as agreements in the field of motor vehicle tax.

For the transformation of international treaties into national applicable law, see Article 59 § 2 of the Basic Law.

If there is no double taxation agreement between the States concerned, as an avoidance of double taxation is governed by the rules provided for the purpose of the relevant provisions of national law (see § § 34c and 34d ITA). According to § 34c para 6 Income Tax Convention law is generally applicable priority ( Treaty override ). Within the European Union, the double taxation treaties are the primary EU law, in particular the primary EU law, the provisions of the EU Treaty and in particular overlaid here by the fundamental freedoms.


In practice of international tax law, ie the taxation of cross -border cases by the sovereign States shall be used for as a rule the following principles, which are then points of the treaty policies:

  • Country of residence principle: A person is liable to tax in the State in which it is domiciled or habitually resident.
  • Source country principle: A person is liable to tax in the country of origin of their income.
  • World income principle: The taxpayer is taxed at its worldwide income.
  • Territoriality: The taxpayer is assessed only with the income he generated on the territory of the State concerned.

Model Convention

OECD experts work out at irregular intervals Model Tax Convention (OECD -MA). The last revision took place in July 2010. Purpose The published comments can be partially used in the interpretation of actually taken Agreement. As a model for the negotiation of tax treaties between developed and developing countries, there is the model agreement developed by the United Nations.

The United States also have their own model agreement.

There are no model agreement for the Member States of the European Union.

Situation in Germany

Basic structure

For unlimited tax natural persons, ie those with residence or usual abode in Germany ( § 1 para 1 German Income Tax Act ) applies to German income tax law generally the residence principle and the world income principle. This means, first, that the whole, achieved anywhere in the world income in Germany is liable to income tax by a natural person who is domiciled or habitually resident in Germany.

For individuals who have neither their domicile nor their habitual abode in Germany § 1 Para 4 Income Tax Act, applies in principle to German income tax law, the source principle and the principle of territoriality.

A resident in Germany taxpayer is therefore subject to tax on its income from foreign sources in Germany. So, for example, subject the interest on a capital investment abroad and in Germany generally subject to taxation. However Subjecting also the foreign state such interest of taxation, it is the task of a double taxation treaty to avoid double taxation or decrease.

For this purpose, two standard methods are used:

  • Exemption method (possibly with the involvement of the progression of title ); In this case, the foreign income from domestic taxation are excluded
  • Imputation method; In this case, the income is taxed, although in both countries, however, the State of residence for the tax abroad thereon levied on his control, ie reduces its tax burden to the already charged in the foreign tax

The exemption method so it stays with the level of taxation of the other Contracting State in which imputation method is established ( in the aggregate ), the German tax burden level.

Two other methods that are to be regarded as sub-cases of the imputation method, only provide for a reduction of double taxation:

  • Pauschalisierungsmethode
  • Deduction method, see also § 34c para 2 and 3 of the Income Tax Act.

There is also the possibility of adopting the tax on income that has been taxed in the source country through the country of residence (see § 34c para 5 ITA ).

Agreement prior

Germany has created over many years an extensive network of double taxation agreements. The corresponding current agreement prior to the start of each calendar year, including the state of the current agreement negotiations will be published by the Federal Ministry of Finance in January. In this specific use case must the temporal applicability of the relevant DBA or of any agreed changes and possibly some of the provisions of the Agreement a point in time can be determined.

Situation in Switzerland

Switzerland has concluded double taxation agreements 108. It is also important that existing with the EU Savings Tax Agreement.

Switzerland has compared to the OECD in 2003 made ​​concessions in order not to be placed on a " black list " of tax havens. Since then, Switzerland is in the revision of the double taxation treaty is obliged to grant the OECD member countries, among others the great assistance for holding companies within the meaning of Article 28 para 2 of the THL. Convention, the corresponding 12 are required to ensure that Switzerland is also removed from the "gray list " of the OECD on those states that have so far only promised cooperation in tax matters. In July 2009, Switzerland had 12 DBA concluded with Denmark, Luxembourg, Norway, France, Mexico, the USA, Japan, the Netherlands, Poland, Great Britain, Austria and Finland or initialed.