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TRIER. According to information from our partner law firm, Lawyers Dr. Haufs-Brusberg & colleagues from Trier, explains attorney Johannes Haufs-Brusberg that a far-reaching success could be achieved in a legal dispute against the tax office Trier. Accordingly, the tax court of Rhineland-Palatinate declared the mutual agreement on the double taxation agreement in Luxembourg to be ineffective, at least in relation to the taxpayer
About the case:
The bus driver who lives in Germany transports cross-border commuters from Trier to Luxembourg and back every working day for the Luxembourg bus company. Faithfully and well he informed the tax office that he had driven his annual workload of 109,343 and 120,960 minutes, as evidenced by the sent and evaluated duty rosters and work lists, 26,315 and 19,951 minutes respectively in Germany.
Taking into account advertising costs pp. In principle, the tax office could therefore tax the wages paid by the Luxembourg bus operator accordingly. Not so the tax office: The double taxation agreement with Luxembourg actually provides that only wages may be taxed in the state in which the work is actually carried out. Here, however, the “mutual agreement of 07.09.2011” applies, according to which, for professional drivers, pp. in principle, when working in both countries, the wages are to be taxed “equally” in Germany as in Luxembourg. This is completely independent of the actual “physical presence” at work. The deviation from the principle of the place of work is also justified in this rough case, the predominant provision of work in Luxembourg for reasons of simplification. The plaintiff’s objection to the Rhineland-Palatinate Finance Court that he could finally state by giving precise details to the minute that he had only worked insignificantly in Germany and that the “mutual agreement” therefore violated the principle of equality in relation to all other employees, among other things, was heard.
With the judgment of October 7th, 2020 (1 K 1272/18), the 1st Senate of the court actually found the ineffectiveness of the taxation regulation according to the place of activity, which deviates from the principle of the double taxation agreement. This, however, not for reasons of “equality of taxation”, but with the, of course, correct argument that a simple consultation agreement like the one here dated September 7th, 2011 could not easily become law.
The latter is absolutely necessary, since according to the Basic Law “reservation of the law” the taxation of a resident actually requires a legal basis. According to the – complicated – legal situation, this implementation did not take place with this mutual agreement. So this is void. The Senate thus states: Due to the lack of binding effect of the mutual agreement, the taxable citizen is at liberty to provide evidence of the activity actually performed by him in the respective country to the tax office and thus the allocation to the respective place where the taxation is basically assumed in the double taxation agreement Work is actually carried out.
Tragic: Despite this difficult, long-term struggle by the bus driver, his complaint was (mostly) dismissed. Despite calculating to the minute and submitting duty rosters and work lists, he did not provide enough material specifically so that the actual work performed in Germany could be assessed. In fairness, the court allowed the appeal on points of law.
Inquired: What does the judgment mean for those affected?
In response to inquiries, attorney Johannes Haufs-Brusberg explains that it is now up to the taxpayers to counteract flat-rate, half taxation by detailing the activity performed and the country of the activity to the minute.
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