Updated : 12/2012
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. However, the basic principles that apply in most cases are given below.
The country where you work will normally tax the income you earn on its territory.
If you are a tax-resident in a different country, your country of residence might also charge tax on the income you earned in the country where you work.
Fortunately, many countries have double tax agreements that let you offset tax paid in the country where you work against the tax payable where you are a tax-resident. In some cases, income earned in the country where you work might be tax-exempt in the country where you are a tax-resident.
To find out what the rules are in your case, check the double tax agreement between the country where you work and the country where you are a tax-resident or ask a European employment adviser.
For more information on income tax, contact details for tax authorities and definitions of resident for tax purposes in each EU country:
The country where you are considered resident for tax purposes can tax your total world income including income you earn elsewhere (both within and outside the EU).
If you move to another country and spend more than 6 months a year there
If you spend less than 6 months a year in another country:
This is just a summary of what usually happens. There could be exceptions to the general rule in tax agreements between some countries. Also, each country has its own definition of 'tax residence'. Your specific circumstances should always be taken into account.
If you already work abroad or are considering doing so, you should find out whether you will be considered a tax-resident in your new country, what the tax rates are there, and what tax deductions are possible.
You can find this out from your local tax office in the country you are going to.
For information about taxes on unearned income in the country where you live (e.g. property taxes, local taxes, gift and inheritance taxes, etc.) consult the local tax office.
Javier from Spain and his German wife are buying an apartment together in Berlin. Javier’s parents offer them financial support, but he finds out that he will have to pay taxes on their gift in both Spain and Germany.
Germany and Spain have no agreement with each other to eliminate double taxation on gifts and inheritances. As a result, there is a risk of double taxation. Javier and his parents seek additional information and spread the gifts out to remain under the legal thresholds and avoid double taxation.
If you move to a new country and are considered a tax-resident there, you should be treated in the same way as nationals of that country. Even if you do not become a tax-resident in the country where you work and earn most of your income, you should normally qualify for the same tax deductions as those available to residents of that country.
If pension contributions or private health and invalidity insurance premiums are tax deductible in the country you move to, they should be deductible for you too, as a tax-resident there, even if your contributions are paid to pension schemes in your country of origin. If you feel discriminated against, seek personalised advice.
Sven, a Swedish national employed in Denmark, is continuing to pay premiums to a Swedish pension fund under a contract that he concluded prior to his arrival in Denmark.
Denmark must allow Sven a tax deduction against Danish tax due on his employment income in respect of the premium he pays to the Swedish pension fund, if such deductions would be allowed for premiums paid to Danish pension funds.