Virtually all double taxation agreements (DTAs) include the concept of tax residence. On the basis of this, it is determined which state receives the taxation right to the income earned by the individual or a company. If a person lives in both states, the center of life interests plays the decisive role.
1st principle: Centre of vital interests under national law
Although there are differences in the concrete definition, the term "center of life interests" largely corresponds to that of an habitual residence according to § 9 AO. The habitual residence of a natural person is linked to the unlimited income tax liability according to § 1 EStG if there is no residence within the meaning of § 8 AO.
Natural persons can move freely, especially in the EU and within the EEA. Nevertheless, the legislature assumes for the purposes of tax “approachability” that the center of professional, family, economic and private interests can only lie in one state. If this is the case, the respective laws link to this center and regulate the unlimited tax liability, in Germany with the entire world income (H 1 “general” EStH).
In order to determine the centre of life’s interests, the following characteristics, circumstances and facts are usually used (for example, the BFH judgment of 23 October 1985, I R 274/82):
This article does not replace tax or legal advice in an individual case. Facts, current law, jurisdiction, documentation and implementation remain decisive.