Tax & Legal

The Supreme Tax Court has held that a treaty provision calling for double tax relief for aircrew by foreign tax credit as opposed to the exemption method for other professions does not offend against the equal rights provision of the constitution.

The Supreme Tax Court has followed its previous case law in holding that the provision calling for taxation of treaty-exempt income if the other state does not exercise its right to taxation can only be applied if permitted by the treaty.

The Supreme Tax Court has held that the treaty override provision making tax exemption of foreign income dependent on tax compliance in the other state is, unless mirrored in the treaty, in breach of international law and therefore unconstitutional. It has referred to the Constitutional Court for a ruling.

The Supreme Tax Court has held that the treaty override clause in the Income Tax Act is to be ignored altogether where only part of the income is taxed in the foreign state.

With effect from 2011, the employment income of German resident aircrew flying for British airlines is entirely taxable in Germany, whilst the earnings of personnel flying for Irish airlines are fully taxed in Ireland.