Taking a job or a work assignment overseas can be an unforgettable adventure and a high point on your resume. But if you are not carefully making sure all of the admin and paperwork is completed correctly you could be in for a tough time trying to get your tax affairs in order.
Here we give a beginner’s guide to the type of things to look out for when working overseas.
Contents
Who do you Work For?
Who you work for may seem like a simple question on the face of it, however, it’s not as simple as it may seem and can affect your tax situation greatly. If you work for a company in the US, for example, and are sent on a secondment to a European subsidiary.
Are you being processed through the European payroll or the American one? Consider that this can mean the difference between paying tax in one country and the other.
If you are self-employed or freelance? The distinction is even more complicated once you need to decide which country to complete a tax return in, one or the other? Or even in both?
Are you a Resident?
Much of the decision making involved in where your tax liabilities fall rests on whether you are a resident or temporary worker. At the very least, you need to be sure you have the correct work permit and are allowed to be performing the role you are fulfilling.
Working Out Your Taxable Profits
It’s important to work out where you have made a profit when trading internationally, and also if a profit has been made.
There are some neat tricks we have seen large multinationals pull by paying royalties to different international sections of their business to avoid paying higher taxes. If you are buying and selling investments, such as looking to buy Tether to sell on, profit is only realized once the asset is sold.
Dealing with a Foreign Tax Office
If you are used to dealing with your domestic tax department, this can be difficult enough. But throw in tax details in a foreign language and new and different rules, it can be an uphill struggle to get right.
Consider employing the services of an experienced international tax expert, this will take all of the stress out of the situation.
Disputes
It’s not uncommon to hear of disputes over international tax bills when individuals work away for a time. The first thing to do when confronted with two different tax offices making claims on the same income is not to panic.
Don’t rush into paying one or the other, seek advice, and consider the situation. If you do end up having to chose which to pay and which to dispute, consider keeping the authorities in your usual area of residence happy, as they have an easier path to prosecution.
This article has been contributed on behalf of Paxful. However, the information provided herein is not and is not intended to be, investment, financial, or other advice.
The Daily Buzz combines the pursuit of interesting and intriguing facts with the innate human desire to rank and list things. From stereotypical cat pictures to crazy facts about the universe, every thing is designed to help you kill time in the most efficient manner, all while giving you something to either laugh at or think about!