The Double Taxation Treaty of America

The double taxation treaty is an international treaty that establishes the rules for double taxation between two countries. For American citizens, double taxation  occurs when they earn some of their income in a foreign country. That income, is taxed by both the American government and the foreign government. Essentially, the taxpayer is required to pay his taxes twice. The double taxation treaties are designed to reduce the resulting financial burden on the taxpayer.

How Double Taxation Treaties Work

Under double taxation treaties, the taxpayer is only taxed by the country where they reside on permanent basis. Permanent residency is defined as living in the country for most (but not necessarily all), of the tax year. In some cases, if the taxpayer resides in one country, but earns significant profit from real estate or business in another state, they will only be taxed by the other state.

However, that does not apply to all taxes - just income taxes. Furthermore, some treaties set specific limits as to what kind of income does and doesn't fall under the treaty. For more information, taxpayers should look up individual treaties on International Revenue Service's official website.

Countries That Have Double Taxation Treaties With United States

They include (in alphabetical order):

  • Australia
  • Austria
  • Barbados
  • Belgium
  • Canada
  • China
  • Cyprus
  • Czech Republic
  • Denmark
  • Egypt
  • Estonia
  • Finland
  • France
  • Germany
  • Greece
  • Hungary
  • Iceland
  • India
  • Indonesia
  • Ireland
  • Israel
  • Italy
  • Jamaica
  • Japan
  • Kazakhstan
  • Latvia
  • Lithuania
  • Luxembourg
  • Mexico
  • Morocco
  • Netherlands
  • New Zealand
  • Norway
  • Pakistan
  • Philippines
  • Poland
  • Portugal
  • Romania
  • Russian Federation
  • Slovak Republic
  • Slovenia
  • South Africa
  • South Korea
  • Spain
  • Sweden
  • Switzerland
  • Thailand
  • Trinidad
  • Tunisia
  • Turkey
  • Ukraine
  • United Kingdom
  • Venezuela
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