When living or working in more than one country at a time, there is always a risk of being taxed twice. Double Taxation is the principle of referring to income taxes that are paid twice on the same source of income. This can occur at both corporate and personal levels and generally applies to certain situations, such as;
- You live in one country but work in another (cross-border commuter)
- You are posted abroad for a short assignment
- You are living and looking for work abroad and have transferred unemployment benefits from your home country
- You have retired to one country and receive a pension from another
For many international business people, this can cause a strain on their income and can be quite the hassle to negate. Thankfully when considering new residences for both personal or professional reasons, Double Taxation Agreements can be taken into consideration to help avoid the issue. If the two countries in question have a ‘double taxation agreement’ then you may be able to apply for a:
- partial or full relief before you’ve been taxed
- a refund after you’ve been taxed
What is a Double Taxation Agreement?
A Double Taxation Agreement is a treaty acknowledged by two countries to protect residents who conduct business operations between two locations against the risk of double taxation where the same income tax is liable in both locations.
The UK’s Double Taxation Agreement Network
Thankfully, the UK has one of the largest double taxation treaty networks in the world, coming in at around 130 countries whereby any income will only be taxed at the highest rate, and not twice.
This is an important note to consider. Tax rates in countries differ and so if you work and reside in two countries, the country that has the higher tax rate is the rate you will pay.
Recently, the UK has added several more countries to its network of Double Taxation Agreement network, with St Vincent and the Grenadines, San Marino, Macao, Dominica, and the Bahamas now joining the ranks. A full list of the UK’s Double Taxation Agreements can be found here.
How can Animo Help?
With our team of taxation and international business specialists, we can advise you on the best practice for your international expansion. We are also fortunate to have offices in jurisdictions that operate with multiple tax treaties, providing peace of mind for our clients who operate internationally. If you have any queries about how the above mentioned may affect you, get in contact with a member of our team today by calling us on +44 (0)207 060 0835, emailing inof@animoassociates.com or filling out a contact form below.
