Expats who temporarily move abroad may face not only the complexity of a foreign tax system; they may also remain liable to some taxes at home. Hence International Tax Planning is essential to avoid unnecessary double taxation.
For most of our clients, the most valuable advice provided by us is based on our deep understanding of tax systems in various countries, enabling us to point out the interaction between the country of residence and country of domicile (often in Common Law Jurisdictions). In any way it is possible to end up in a Tax Residency in one or more countries, triggering Tax Liabilities in each country.
Through our scope of work in International Taxation we offer a seamlessly integrated second to none international and local tax advice – always backed up through local partners. We cover the full range of Taxation – Income Tax, Capital Gains Tax, Gift & Inheritance Tax and Wealth Tax.
Speak to us prior to moving abroad to discuss the complexity of Tax Residency.
In most Common Law jurisdictions estate planning may include the use of a Trust.
However, in most European countries the legal system governing estate planning is very different, and will most probably include ‘forced heirship’ laws and the imposition of succession or gift taxes (which are paid by the beneficiaries, the settlor or even both).
Some countries won’t recognize the legal system of a Trust and didn’t enter into “The Hague Trust Convention” – an international agreement on the Law Applicable to Trusts and on their Recognition.
In such cases, all Trusts Assets are deemed to be personal assets of the Settlor if it comes to Wealth Tax. To avoid unnecessary taxation, proper tax planning is key.
DTA – Double Taxation Agreements
Different countries have their own tax laws. If you are a resident in one country and have income and gains from another, you may have to pay tax on the same income in both countries – or none of them. DTA – Double Taxation Agreements aim to avoid ‘double taxation’ or double non-taxation.
For example, an individual who is resident in Belgium, but has rental income from a property in another country, may have to pay tax on the rental income in both in Belgium and that other country.
To avoid double taxation (and of course a double non-taxation), many countries entered into Tax Treaties (DTA – Double Taxation Agreements), mainly based on international OECD-Standards.
Nowadays it is important to have ever increasing OECD Standards in mind to avoid possible Tax and Criminal Allegations through non-compliant and validated Corporate Structures. Speak to us to find out your Alternatives.
International Taxation – CFC-rules
Offshore or Onshore?
It is surely not forbidden to own an Offshore Company for a legitimate purpose. However, if the only purpose of your Offshore entity is Tax Avoidance or even worse Tax Evasion, you should reconsider all options.
Through latest OECD developments – AEOI and CRS Standards – all information needed is at Tax Authorities fingertips. Hence there is no space for any undeclared income or hidden assets.
Speak to us to find more about how to comply with national Tax rules.
Foreign Tax Credits
Even if there is no double taxation agreement in place between your country of residence and the country where the income arises, tax relief may be available by means of a foreign tax credit.
For example, if you pay tax at 15% on your foreign income in the country in which the income arises, then you may still have to pay tax in the country of your tax residence If the tax rate there is 20%, you would only have to pay 5% of tax there, as you would be given a tax relief for the 15% of tax paid overseas.
In some cases, foreign income is even tax-free in your country of residence. Speak to us to find out more.
International Taxation – Tax Relief
The Foreign Account Tax Compliance Act (FATCA) is intended to detect and deter the evasion of US tax by US citizens who hide money outside the US. This agreement shall create greater transparency by strengthening the flow of information, its reporting and compliance by providing rules around the processes of documenting, reporting and withholding on a payee.
FATCA rules do not only have an impact on the financial services sector but also affect many entities outside of the traditional financial services sector with operations both in and outside of the United States.
To find out more about FATCA and its regulatory framework speak to us.