Freelance tax query

Soldie

I live and work full-time in Germany. As a registered resident, my taxes are paid here. However, I want to start doing some freelance work for Irish clients on the side. I still have an Irish address so I thought it'd be easiest to just set up as a sole trader at home. Does this make sense or is it more hassle than it's worth? Presumably I have to notify the German tax authorities of my overseas income, and vice versa, so I'm not sure if it'd even reduce my tax exposure.

Advice is welcome.

srsly78

I doubt you can be a sole trader in Ireland if you are not even tax resident. The very efficient German taxman might have a problem with your idea too.

What you are actually proposing is exporting services from Germany to Ireland, so time to start wading through the byzantine German regulations governing small businesses.

Soldie

According to this page I am still considered ordinarily resident in Ireland until I have been non-resident for three continuous years, so perhaps the biggest problem is the German regulations, not whether or not I can register as a sole trader in Ireland.

Citizenpain

As far as i know; a domiciled, ordinarily resident but non-resident person is not liable to Irish tax on income of which no part of which is carried on in Ireland.

Think you fall into this catagory? or would the freelancing be carried on in Ireland?

Soldie

Citizenpain wrote: »

As far as i know; a domiciled, ordinarily resident but non-resident person is not liable to Irish tax on income of which no part of which is carried on in Ireland.

Think you fall into this catagory? or would the freelancing be carried on in Ireland?

Yeah, I fall into that category. Although I would be providing services to Irish clients, the work would be carried out here.

But my preference would be to pay tax in Ireland if it meant paying less tax. German tax rates are quite high, so I'd like to take advantage of my domiciled, ordinarily resident but non-resident status if it's there to be taken advantage of. Am I entitled to register as a sole trader in Ireland and pay tax there or would this arrangement have implications for my taxable income in Germany? Likewise, would my German income affect the amount of tax I'd pay as a sole trader in Ireland?

Citizenpain

I'd say you need professional advise for this tbh. Will you do the work in Ireland ?

srsly78

Never mind the Irish residency thing, it's the German ones that concern you. If you don't want to pay German tax then stop living there so much, limit yourself to 6 month stays or less (subject to 3 year rule). I There are different rules for residency between EU countries I think, the rules you linked above would apply in other cases. Hire an international tax advisor if there is much money at stake.

http://europa.eu/youreurope/citizens/work/abroad/taxes/

"There is no EU-wide law that says how EU nationals living and working in another EU country are to be taxed on their work income. There are only national laws and double tax agreements between countries which do not cover all eventualities and vary considerably. "

Soldie

Citizenpain wrote: »

I'd say you need professional advise for this tbh. Will you do the work in Ireland ?

I can be flexible in that regard. All of it would be carried out here, but I make frequent visits home so it's possible for me to do some in Ireland, too, if that changes anything.

srsly78 wrote: »

Never mind the Irish residency thing, it's the German ones that concern you. If you don't want to pay German tax then stop living there so much, limit yourself to 6 month stays or less (subject to 3 year rule). I There are different rules for residency between EU countries I think, the rules you linked above would apply in other cases. Hire an international tax advisor if there is much money at stake.

http://europa.eu/youreurope/citizens/work/abroad/taxes/

"There is no EU-wide law that says how EU nationals living and working in another EU country are to be taxed on their work income. There are only national laws and double tax agreements between countries which do not cover all eventualities and vary considerably. "

Thanks for the link. According to that site, I'm considered to be ordinarily resident here in Germany. The site also says that you cannot pay tax twice on the same income. Since I'm also considered to be ordinarily resident in Ireland, I'm wondering if I have the option of registering as a sole trader in Ireland on that basis.

Appreciating the help so far, guys. It's all a bit confusing and it's looking like I'll need to have a chat with an adviser.

srsly78

http://europa.eu/youreurope/citizens/work/abroad/taxes/germany/employed_en.htm

6 months appears to be the magic amount of time for an eu citizen to become tax resident in Germany. The relevant treaty overrides the rules you linked above.