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Question about US and Germany Tax treaty

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Maccaroni

New member
California

Dear all,
My name is Philipp and I am a visiting scholar working at Stanford University since May 2017.
I started working at stanford under the tax exemption treaty between the US and Germany described in article 20(1) of the Tax Treaty Documents (https://www.irs.gov/businesses/international-businesses/germany-tax-treaty-documents). Since January of this year I am not tax exempt anymore,as the Tax treaty goes for a limit of 2 years, and upon looking at the article more in detail I came over this sentence. “As clarified in Paragraph 18 of the Protocol, unless the competent authorities agree otherwise, if a professor or teacher remains in the host country for more than the specified two year period, he may be subject to tax in that State, under its law, for the entire period or his presence”
Now, I am a bit unsure about this last sentence, does it mean that I need to pay back retroactively all the tax exempt taxes of the last two years because I stayed longer than two years? or does it mean that from now on I have to pay normal taxes for the entire period of my remaining presence?

I really appreciate if somebody could help me figure this out or point me in the right direction

Best wishes
 


Taxing Matters

Overtaxed Member
Now, I am a bit unsure about this last sentence, does it mean that I need to pay back retroactively all the tax exempt taxes of the last two years because I stayed longer than two years? or does it mean that from now on I have to pay normal taxes for the entire period of my remaining presence?

I really appreciate if somebody could help me figure this out or point me in the right direction

Best wishes
If you exceed the two years then after the two years is over the income you receive after that is subject to tax, but the first two years are still exempt. This assumes that your stay in the U.S. is still temporary. If you have instead changed to stay here permanently you lose the exemption entirely and would have to pay tax on the first two years. The Technical Explanation to the 2007 protocol to the Treaty explains it as follows:

Unlike the existing Convention, if the two-year period beginning from the date of his arrival is exceeded, the exemption will apply, but only for the first two years and only if the visit is temporary. Thus, if a person comes to a Contracting State for the purpose of teaching and stays for a temporary period in excess of two years, the person will not retroactively lose the exemption with respect to the first two years.
 

Maccaroni

New member
Thank you very much for your quick and detailed response. This really helps a lot
Please let me know if there is any way for me to give you or this site a good review. I am really genuinely surprised how good it works here, compared back to Europe.

Best wishes
 

Maccaroni

New member
Dear Team,

I have another questions regarding the Tax exemption treaty between Germany and US described in article 20(1)

My wife worked as a PostDoc at Stanford University under the tax treaty described above, and during that time had an additional part time job for a few months as a consultant in a private company involved in education (preparing lecture and teaching materials for a private college)

As far as we can read in the article 20(1) it states that:

"The host State exemption will apply if the teaching, study or research is carried on at an accredited university, college, school or other educational institution, or at a public research institution or other institution engaged in research for the public benefit. The term "public research institution" is intended to cover such institutions as the National Institutes of Health in the United States.

For the exemption to apply to income from research, the research must be undertaken in the public interest, and not primarily for the private benefit of a specific person or persons."

Now we are not sure how to exactly interpret this, how can we find out if the additional consultation job for the private college falls under the criteria described above or not?

Basically the question is, is this additional work covered by tax exemption or not or how to find out?



Thank you again for all your support



Best wishes
 

Maccaroni

New member
Ok, thank you, that makes sense
While she was on the germany/US article 20(1) Tax Treaty, my wife also had two months of maternity leave paid by an insurance called libery mutual. Would that income also fall under the treaty or not?
 

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