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Old 01-25-2018, 09:24 AM
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Applicability of US-German tax treaty, Article 20, paragraph 4

Dear all,

I'm a German researcher and I'll start working for an american university in March 2018.
During my planned two-year stay in the US, I'll be a resident in Germany for tax purporses and I'll be fully taxed in Germany.
Therefore the US-German tax treaty, article 20 (Visiting Professors and Teachers; Students and Trainees) should apply to me.

I'm now trying to understand which paragraph of article 20 applies.

One half of my salary will by paid directly by the university and the other half comes from a scholarship.
The human ressources deparment of the university is now arguing that paragraph 4 of article 20 should apply to me. However I think that their interpretation is wrong.
I would appreciate your help in interpreting the paragraph. Also suggestion to more specialized discussion boards are welcome.

Paragraph 4 of article US-German tax treaty says:

A student or business apprentice within the meaning of paragraph 2, or a recipient of a grant, allowance, or award within the meaning of paragraph 3, who is present in a Contracting State for a period not exceeding four years shall not be taxed in that State on any income from dependent personal services that is not in excess of $ 5,000 (five thousand United States dollars) or its equivalent in Deutsche mark per taxable year, provided that such services are performed for the purpose of supplementing funds available otherwise for maintenance, education, or training.
According to my understanding, this paragraph applies to income that is not received for work as a researcher or teacher
but instead refers to any income from dependent personal service regardless of the type of work.
(E. g. it would apply to student who receives a scholarship for university studies and works as a barista to improve his or her pocket money.)

For income from work as a researcher or teacher, I think paragraph 1 takes precedence. According to paragraph 1, taxes for such work are fully exempt from US taxation.

It my interpretation correct?


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