Fortunately, most countries have double taxation conventions. As a general rule, these agreements save you double taxation: if you live in one EU country and work in another, the tax rules applicable to your income depend on national laws and double taxation conventions between these two countries – and the rules can deviate significantly from those that determine the country responsible for social security issues. In general, international tax treaties contain the following definitions and rules, without being exhaustive: if you spend more than 6 months a year in another EU country, you may be considered a tax resident in that country and unemployment benefits transferred by another country may be taxed there. Unemployment benefits under many bilateral tax treaties are only subject to the country of tax residence. In an increasingly globalized world, many individuals and companies work and do business abroad. Therefore, jurisdictions must define how income earned abroad is taxed. Otherwise, income could be taxed in more than one country, resulting in double taxation. To avoid this, countries negotiate double taxation (DBA) conventions. The agreement is the standard for the effective exchange of information within the meaning of the OECD`s initiative on harmful tax practices. This agreement, published in April 2002, is not a binding instrument, but includes two models of bilateral agreements. A number of bilateral agreements were based on this agreement. [36] The countries with the smallest network of tax agreements are Iceland (45 countries), Lithuania (54 countries) and Greece (57 countries). On average, the European countries covered have 82 double taxation conventions.
Many countries have tax treaties with other countries (also known as double taxation agreements or DBAs) to avoid or mitigate double taxation. Such contracts may include a number of taxes, including income taxes, inheritance tax, VAT or other taxes. [1] In addition to bilateral treaties, multilateral treaties also exist. For example, European Union (EU) countries are parties to a multilateral agreement on VAT under the auspices of the EU, while a joint mutual assistance treaty between the Council of Europe and the Organisation for Economic Co-operation and Development (OECD) is open to all countries. Tax treaties tend to reduce taxes in one contracting country for residents of the other contracting country in order to reduce double taxation of the same income. Member States` double taxation conventions will continue to be reviewed by the Court of Justice. In particular, the problems arising from the current lack of coordination in this area, particularly in triangular and third-country situations, will get even worse. In the absence of Community action, there can be significant political and economic implications for Member States` policies in this area. That is why the Commission hopes that its approach to progressive and moderate coordination of treaty policies will ultimately be supported and that it will face a constructive attitude from the Member States. Bulgaria Bulgarian and International tax treaties Almost all tax treaties offer a specific mechanism to eliminate it, but the risk of double taxation is still potentially present.
This mechanism generally requires each country to provide a tax credit for the other country in order to reduce the taxes of one country`s inhabitant.
