The risk of double taxation arises when your earnings have the right to tax the two countries, as for example:
- you live in one EU country but work in another (frontier worker)
- you sent abroad for a short period
- you live and look for a job abroad and have transferred your unemployment benefits from your home state
- you are a pensioner in one country, but the pension will be paid by another country
Although in these situations you are still subject to the tax laws of your country of residence, the obligation to pay taxes, you have perhaps in other countries.
Fortunately, most of the countries of the European Union concluded a convention for the avoidance of double taxation. These contracts generally avoid double taxation:
- by a number of bilateral tax treaties, the tax you paid in the country where you work, be credited against the tax you should pay in your country of residence.
- in other cases, the income of the country in which you work, be taxable only in that country and exempt from tax in your country of residence.
In Slovakia, a double taxation treated by Treaty between the Czechoslovak Socialist Republic and the Republic of Austria for the avoidance of double taxation with respect to taxes on income and assets of 1978.
Tax rates in the two countries are likely to be different. If the tax rate in the country where you work is higher, you will be paid a final tax, even if this tax is credited against the tax you should pay in your country of residence, or if you your country of residence exempt from any further tax.
To request the application of protection against double taxation, you may have to prove where you stay and you have already paid taxes on your income. Therefore you know in advance by the tax authorities, which documents and documents you need to submit.
Which country you may be taxed?
EU citizens who live, work or reside outside their home countries, there are no EU-wide rules on taxation.
The country in which you are resident for tax purposes, may generally tax your total revenues worldwide, derived either from employment and business, or from other sources. These revenues include wages, pensions, benefits, income from property or other sources, or capital gains from the sale of assets, in any country in the world.
Although each country has its own definition of tax residence:
- resident taxpayer will generally regarded in the country where you are staying more than six months a year:
- if you live in another EU country less than six months a year , shall normally resident for tax purposes in your home country
Equal treatment
Under EU rules, regardless of in which EU country you are considered a resident taxpayer, you should have the same tax obligations as citizens of the country and under the same conditions. For example, in the country where you are resident for tax purposes or where it comes from your all or almost all income, you should be entitled to:
- all family benefits and tax deductions for the cost of childcare, even if incurred in another EU Member State,
- all the tax deductions for mortgage interest, even for the property you own in another EU country,
- common tax bill with spouse, if it is possible in this country
Source: https://europa.eu/index_sk.htm