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Taxing fees at source (in \"source\" country) - Please respond!
Thread poster: Karin Walker
Karin Walker  Identity Verified
Germany
Local time: 05:44
German to English
+ ...
Nov 5, 2001

Hi there,



I have heard (and since had confirmed by a tax advisor) that the German tax authorities (and maybe even others in Europe) have come up with a new scheme to prevent tax fraud for those persons earning money from sources in other countries. In this particular case, an organist from France came to Germany to give a concert. His fee was xxx DM. The organiser of the concert, who pays his fee, must pay a percentage of this fee to the tax authorities. He has the choice of either deducting this percentage from the XXX fee, OR paying it on top, that is, paying the organist only the net fee. The organist receives a statement from the tax authorities that his fee has been taxed at source, thus releasing him from the obligation to report his earnings in Germany to the French tax authorities.



The reasoning behind this practise appears to be that the tax authorities in the country where the money was earned used to have no control over whether this money was taxed \"at home\" by the person who earned it. This system is meant to prevent that.



While hearing this, (and after having gone red in the face from the injustice of it), I thought that interpreters would be in the same position (if they travelled abroad to do a job). I will continue to research into this - in the meantime, I\'d be interested to hear whether anyone else has any experiences of this system.


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Ralf Lemster  Identity Verified
Germany
Local time: 05:44
English to German
+ ...
...sounds like a VAT issue Nov 5, 2001

Hi,

Obviously, this should be checked by a tax advisor (which I am not). However, it sounds as if this concerns VAT rather than income tax.

Pursuant to section 51 of the \"Umsatzsteuer-Durchführungsverordnung\" (UStDV) [http://www.steuernetz.de/gesetze/ustdv/20001219/p51.html] , VAT must be deducted when purchasing services from abroad - the case I researched involved a translation provided by a colleague in New Zealand to a museum (i.e. a legal entity under public law) in Germany.

Most commercial domestic buyers, however, will qualify for the exemptions in section 52 UStDV (replace the \'51\' in the URL with \'52\'). Where things get nasty is when working for an entity (such as the museum referred to) that does NOT qualify for the deduction of input tax (\'Vorsteuerabzug\').



I don\'t know the situation outside Germany - given that the VAT regimes of EU countries have been harmonised to a good extent, I dare say this should be similar.



In summary: check with your tax advisor before doing cross-border business.


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Andrew Morgan
Local time: 05:44
German to English
+ ...
Künstlersteuer Nov 6, 2001

Now, Im not a \"Steuerberater\" und you should consult one for concrete advice but Ralf is actually wrong. For the reasons given, there is a special and very hotly discussed \"Artists Tax\" which is levied on all foreign resident artists that perform in Germany. Several international acts (Michael Jackson and Kansas for instance) have cancelled tours because of the extra cost involved. The tax was introduced under Helmut Kohls conservative government by Theo Waigel and is, AFAIK, currently under review. Some reports say that visits by foreign artists have dropped by 30% as a direct result of the tax.

The imoprtant thing is, however, that this really is just a tax on performing artists. As a translator you will be subject to the usual rules and levels of income tax. In germany there is a PAYE scheme and a yearly tax-declaration, I have no idea how long you have to be here in order to be subject to this though.


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Karin Walker  Identity Verified
Germany
Local time: 05:44
German to English
+ ...
TOPIC STARTER
Thank you Ralf and Andrew Nov 7, 2001

Thank you both for your input. Ralf, I checked steuernetz.de and what it said there makes sense - I suspected that the situation I described related to Umsatzsteuer and this was a good confirmation. However, even though I went across to the UK in 2000 to do a job, my tax advisor never said anything about how to declare those earnings, indeed no tax was deducted at source in the UK (I am based in Germany, Andrew).



This subject just bothers me a bit because I don\'t want to get into trouble. No interpreters out there who can volunteer their experiences?


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