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I am a Croatian citizen residing in Spain. I got a job offer in Germany where I would be working from Mon - Thu, and rest of the days I would be back in Spain. I would be working with a company as a freelancer under a contract. Croatia recently applied a new law which lowers the taxes for people under 25 and 30. I'm curious if I could register as a freelancer in Croatia (To pay the lower taxes compared to registering in Spain)? Considering that I reside in Spain, but I am a Croatian citizen. Would that possibly cause the problems?

  • The answer is probably “everywhere relevant, then rely on tax treaties where available, usually ending up paying just the jurisdiction with the heaviest tax load”, but I’m not qualified to say this definitively. – Lawrence Aug 20 at 16:49
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There are multiple elements in play here, but at the end you pay taxes in Germany or are at fault of tax evasion.

Taxes have to be paid at place of residence, but INCOME earned in one country MUST be taxed in that country. As you stay in Germany Monday-Thursday and work there your income from that freelancer job is due German taxes. It would be different for remote work, when your country of residence - NOT citizenship - would be relevant. But the fact that you work IN Germany (out of offices of a company) means the income is earned in Germany.

Citizenship is irrelevant in most cases - exceptions being one African country and USA, iirc. If you do not reside in a country, you pay no taxes there. Spanish residence is irrelevant as double taxation applies - and the income from Germany is already taxed in Germany. Not financial advice, you MUST talk to some tax advisor specialized in international taxes (have fun paying that fees) because there are a TON of edge and special cases.

And yes, that can mean paying taxes in multiple places. I personally pay in 2 countries and I knew a freelancer once paying in three. Funny enough I earn MOST of my money in Germany but do not pay German income tax on that because I WORK out of my offices in Poland (so polish taxation applies), but I pay German income tax on rental income made in Germany. The situation gets quite complex quite fast.

And yes, this may mean higher tax rate. Alternatively work out of Croatia and live there ;)

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Article 9.1 a) of the personal income tax law of Spain provides for you to argue that you are exempt from paying the personal income tax in Spain.

However, article 107.1 of the general taxes law makes a big provision for the revenue services of Spain to demand you pay taxes in Spain, when combined with different articles of each tax law.

The combination of those two and annex articles make easy for them to create a case for them to demand you pay them personal income tax, specially if you are married (with or without children) and they (or them all) live in Spain. In this last case, you are required to prove what article 9.1 a) of Ley 35/2006 writes about, even without the need to resort to Ley 58/2003.

So in fine, I'd go with:

  1. If you are single, pay then do your taxes in Germany. It's unlikely that you are going to have a problem, if you have your German paperwork well done.

  2. If you are married and your significant other undeniably fiscally lives in Spain, either:

    a. Pay then do your taxes in Spain (and then I don't know what sort of thing you have to do in Germany, but I don't think that's going to be easy).

    b. Pay then do your taxes in Germany, and be prepared to prove job travels to Germany (WRT article 9.1 of Ley 35/2006) to the revenue service of Spain when/if they demand you pay the personal income tax to them.

    1. In this case you are required to pay yet another different tax only if you also happened to do occasional works for a Spanish employer or contractee.

Hope that helped.

DISCLAIMER: This is not your tax advisory, it's a vague (yet informed) entry level reference in order to guide you. Here's no responsibility for any damages caused. If on doubt, always choose to go to the tax advisory office or to the revenue service office, depending on the cases.

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I don’t know anything about tax law in Croatia, Spain, or Germany.

Having said that, in general, you pay taxes in the country you live in and/or work in.

It sounds like you will be splitting your residence between Spain and Germany, so I don’t think you can arbitrarily choose to only pay tax to Croatia just because the taxes would be lower, even if you are a Croatian citizen.

  • For abstract income, yes, but not for income earned in one country. Croatia is totally out, though ;) – TomTom Aug 20 at 5:00

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