"Mastering Cross-Border Tax Rules for Expats & Income"

The article provides an overview of international taxation, covering key concepts such as residence- and source-based taxation, double taxation, tax treaties, expatriate taxation, and compliance measures. It highlights strategies like foreign tax credits, tax equalization, and global mobility tax planning to navigate cross-border tax complexities.

International Taxation: Tax Rules for Cross-Border Income and Expatriates

Category Description
Residence-Based Taxation Countries using residence-based taxation tax their residents on worldwide income, regardless of where it is earned. Non-residents are taxed only on income sourced within the country.
Source-Based Taxation Under source-based taxation, countries tax income that is generated within their borders, regardless of the taxpayer's residency status.
Double Taxation Occurs when the same income is taxed by two different countries. Double taxation agreements (DTAs) or treaties are often established to mitigate this issue.
Tax Treaties Tax treaties are agreements between countries that outline the rules for taxing cross-border income to prevent double taxation and promote economic cooperation.
Expatriate Taxation Expatriates may be subject to tax obligations both in their home country and in the country where they work. Tax treaties and exemptions may apply to reduce the burden.
Foreign Tax Credit Allows taxpayers to offset taxes paid in a foreign country against their domestic tax liability, reducing the risk of double taxation.
Tax Compliance for Expatriates Expatriates must comply with tax filing requirements of both their home country and host country. This includes reporting foreign income and claiming applicable deductions or credits.
Tax Equalization Companies often provide tax equalization policies to ensure expatriates pay no more or less tax than they would have paid in their home country.
Transfer Pricing Rules governing the pricing of goods, services, and intangible assets transferred between related entities across borders to prevent profit shifting and ensure fair taxation.
Permanent Establishment Defines the criteria for taxing a foreign entity's income within a country. Usually involves having a fixed place of business or significant economic presence.
Withholding Taxes Taxes withheld at the source on cross-border payments such as dividends, interest, royalties, or service fees. Rates are often reduced under tax treaties.
Global Mobility Tax Planning Strategic planning for tax compliance and optimization for employees working across multiple jurisdictions.
Taxation of Digital Services Some countries impose specific taxes on digital services provided by foreign companies, such as e-commerce and streaming platforms.


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