Tax treaty

Tax agreements (double taxation agreements, double taxation agreements) are tax treaties that are concluded between two countries (bilateral) or, in exceptional cases, between several countries (multilateral). They apply to taxes on income and assets as well as to inheritances, estates and gifts. In addition, there are administrative and legal assistance contracts in place to promote the intergovernmental exchange of information.
With the industry agreements, tax breaks are granted for shipping and aviation companies. The new German agreements also include sales and performance-related taxes, such as B. value added tax, Real estate transfer tax or vehicle tax, integrated. The primary aim of the agreements is to avoid double taxation or multiple taxation; the right to tax on parts of the income and assets is divided between the two contracting states.

In addition, non-taxation or low taxation is avoided. The tax treaties are also intended to achieve economic policy goals: the prohibition of discrimination, the promotion of international freedom of movement or the support of economic relations. Tax treaties can be investment aid instruments for developing countries. Germany has concluded agreements on income taxes and wealth taxes with all of its major trading partners.

However, there are relatively few Inheritance Tax Agreements due to the large differences in the national Inheritance Tax systems. The German agreements are based on the model agreement of OECD. This means that tax contracts are largely standardized. The tax treaties apply to persons who are resident in one or both of the contracting states.

The unlimited tax liability therefore always results in an agreement entitlement. The tax claim is split between the country of residence and the source country. The national right to tax is restricted or retained.

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