Double Taxation Agreement (DTA)
Tax is a complicated subject for many people and for those who are receiving some form of income in more than one country, it can be even more of a headache.
What is a Double Taxation Agreement?
This is a question that we are commonly asked, particularly because we have many clients who are expatriates and are receiving income in their home country and also in their new country of residence. It leaves many people confused as to how they will be taxed and under the laws of which country.
To explain things as simple as possible, a Double Taxation Agreement is a ‘treaty’ between two or more countries to ensure that the individual avoids paying tax twice, in both jurisdictions, on the same income.
For UK expatriates, you can view tax treaties in place with the United Kingdom here.
Double Taxation Agreements are in place to ensure that the taxing rights of income are only liable in your country of residence and not in both countries you are receiving income from.
Let's take an example:
If you have moved out of the UK permanently but are receiving income from your UK pension if your new country of residence has a double taxation agreement in place with the UK, then you may not be liable to UK income tax on the income you are receiving. However, this is not guaranteed, and you would need to apply for to HMRC for a no-tax (NT) code. If the NT code is granted, the taxing rights may be shifted to your new country of residence and assessed in line with their tax laws.
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We would always recommend that you seek professional tax advice from a local tax adviser if you are receiving income in more than one country, to ensure that you take the necessary steps to avoid being taxed in more than one country.
Visit our Double Taxation Agreement (DTA) Analysis page for a full list of the agreements that are in place between various countries across the globe.
You should note that we are not authorised to provide you with personal tax advice but if you would like more generic information regarding Double Taxation Agreements, contact a member of our team today and we would be happy to answer any questions you may have.
This article does not contain personal or financial advice. It is provided for general information only and does not take into account your personal objectives, financial situation or needs. IVCM is not authorized to provide you with any personal or financial advice.
If you require financial any advice then you must make sure that you obtain advice from a suitably qualified financial adviser.