Last week, I provided some tips on how to limit the stresses of moving internationally. This week, I am going to try to provide tips to limit stresses about your taxes when moving overseas.
Leaving your home country usually does not mean that you are beyond the reach of its tax authorities. Any income from investments or other sources that is in effect in your home country usually remains subject to tax. Your earnings abroad may be taxed directly by your host country.
In most cases as an expatriate, you will pay taxes to your country of residence, however that may be defined. In some cases, your country of residence may have an agreement of exemption, or double-tax treaty, with your home country. This means that your home country credits your payment to your host country, so that the same income is not taxed twice.
Receive tax advice before leaving:
Many employers provide tax counseling and assistance to their expatriate employees, either in-house or through outside consulting firms. If this service is not provided by your employer, you should establish your own contacts with an international accounting or consulting firm specializing in international tax matters.
Tax responsibilities for expatriates:
Contact your respective government agency for information on what your tax responsibilities will be while living away from your home country. In addition to contacting your appropriate government department, the consulate of your destination country may be able to provide useful information.
By knowing the tax laws in your new city overseas and learning about your tax responsibilities here, you won’t be taken surprised by a big tax bill at the end of the year and best of all, Uncle Sam won’t be knocking on your door.