[Garibaldi]

Hi,

I'm an Indian citizen who has just moved to the US. Before this I was in Europe and had been paying taxes to Germany. US has a tax-exemption treaty valid for 2 yrs with both India as well as Germany. I'm not eligible for the Indian-US tax-exemption treaty because I was not a "resident" of India right before coming to the US in the sense that I had been paying taxes to Germany. This makes no sense at all. Is there a work around to the situation? Can I not ask for the US-German treaty to apply in my case?

Thanks and regards,
Garibaldi

[Five Rings]

What are the circumstaces of "your case".

[Garibaldi]

The circumstances are: I can not avail the US-India tax treaty because I'm not coming directly from India. Can I avail the US-German tax treaty then, even though I'm not a German national but was a German "resident" right before coming to the US?

[Five Rings]

You may call upon the US/German treaty if, under German law, you were considered a resident of Germany.

[Peter-Berkeley]

OK, I am still learning about the tax treaty situation myself and I can not answer your question - but I can shed some light on the US/German tax treaty.
Germany does tax the world-wide income of its citizens, thus the US/German tax treaty only determines where you have to pay tax - either in the US or in Germany. In a standard situation, German taxes are higher (thus it would make sense to pay the US taxes) - but some fellowships are tax free in Germany (but not in the US... ) - with other words, before trying to find out whether you can claim the US/German tax treaty you should figure out whether it would benefit you after all...

[Garibaldi]

I'm a research scholar. As per the tax-exemption treaties between the US and countries like Germany, Italy, UK, India etc, research scholars and teachers have 100% tax exemption for two yrs. They get to take all of their salary home. I don't think they have to pay taxes to their home countries either. I have many colleagues who are benefiting from this treaty and all that would happen is that they'd have to start paying taxes 3rd yr on. Earlier the rule was that if you stayed even one day more than 2 yrs, you'd have to pay taxes from scratch but now that has changed. That's my understanding.

[Peter-Berkeley]

That was my understanding as well - and it is true for most of the tax treaties, but not for the US/Germany tax treaty - as I just recently found out in this forum.
Germany is one of the few countries taxing the world wide income of its citizens and the US/German tax treaty only determines where to pay your tax.
https://www.askmehelpdesk.com/taxes/...-333284-2.html

I am in the situation that I claimed the tax treaty for 2 years and now I found out that I still have to pay tax and I am currently un-claiming the treaty to be able to pay tax here in the US because it is less.
If someone knows for sure that under the tax treaty Germans don't have to pay tax (independent from source of income) - I am all happy to read about it :-)

[Five Rings]

Gentleman:
You will notice that in every tax treaty between the United States and any other country there is a passage called the "savings clause" to which both signatories adhere.

It states, "Except to the extent provided in paragraph 5, this Convention shall not affect the taxation by a Contracting State of its residents (as determined under Article 4 (Resident)) and its citizens. Notwithstanding the other provisions of this Convention, a former citizen or former long-term resident of a Contracting State may, for the period of ten years following the loss of such status, be taxed in accordance with the laws of that Contracting State.

5. The provisions of paragraph 4 shall not affect:
a) the benefits conferred by a Contracting State under paragraph 2 of Article 9 (Associated Enterprises), paragraphs 1 b), 2, and 5 of Article 17 (Pensions, Social Security, Annuities, Alimony, and Child Support), paragraphs 1 and 4 of Article 18 (Pension Funds), and Articles 23 (Relief From Double Taxation), 24 (Non-Discrimination), and 25 (Mutual Agreement Procedure); and
b) the benefits conferred by a Contracting State under paragraph 2 of Article 18 (Pension Funds), Articles 19 (Government Service), 20 (Students and Trainees), and 27 (Members of Diplomatic Missions and Consular Posts), upon individuals who are neither citizens of, nor have been admitted for permanent residence in, that State.

This complicated wording means basically this; to citizens and residents of the contracting states their own domestic law applies and it is as if the treaty does not exist.

To Peter Berkeley this means that if German tax is higher than US tax you will pay first the US tax and if Germany requires more you will pay that taking a credit for US tax already paid.

This is not double taxation in the legal, grinding. Lickpenny world of taxation between nations.