by Brett Andrews

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Do expats pay taxes abroad?

The U.S. has tax treaties with lots of foreign countries. These treaties can lower or eliminate the taxes that people from other countries owe to the U.S. on certain types of income. The specific rates and exemptions vary depending on the country and the type of income, such as employment wages, capital gains, and so on. The treaties also offer similar benefits to U.S. citizens and residents who earn income in a foreign country. But most treaties have a “saving clause” that prevents U.S. citizens and residents from using the treaty to avoid paying U.S. taxes on their worldwide income.

If the treaty does not cover a particular kind of income, or if there is no treaty between your new country and the United States, you must pay tax on the income in the same way and at the same rates shown in the instructions for your U.S. tax return. In other words, expats living in a foreign country may be responsible for paying taxes to both the U.S. and their new home country.

In addition to these tax treaties, the IRS offers other tax credits and deductions that can offset foreign taxes even more. Some of these include the Foreign Earned Income Credit (FEIE), foreign tax credit, and foreign housing exclusion. Your expat tax specialist may have more ideas for lowering tax burden beyond these; we’ve partnered with My Expat Taxes to handle our tax questions and think you should, too.

Note that you may still be responsible for paying state taxes for your place of residence within the US. Think about moving it to a new domicile state that doesn’t collect an income tax, such as South Dakota, Florida, or Texas. It’s harder to do this after you leave the US, so be sure to consider this change during the planning phase of your expat journey.

How is my US social security impacted?

Many expats have questions about their US social security and how they might be taxed while living abroad. According to My Expat Taxes, 85% of your US social security benefits can be taxable on your US expat taxes. SSI can bring a tax liability within your foreign country if there’s no clause in the tax treaty to provide source country taxation on these payments.

Additionally, the money you receive via social security will not be eligible for the FEIE (defined below). This expat tax deduction only applies to foreign earned income; by definition, your US social security income is not foreign earnings.

Let’s get into tax treaties

With that said, here’s some countries you should consider moving to that won’t double tax your income. Since this can be a complicated article to read, let’s start by defining some key terms that come up often here:

• Child tax credit (CTC): The US and some of the countries below allow expats to claim a tax credit on their qualifying dependents or children.
• Foreign earned income exclusion (FEIE): The biggest US tax deduction on foreign income, this allows you to exclude your foreign earned income from going towards your US tax debt. You must pass the bona fide residency test or physical presence test to claim it. This allows you to exclude up to $120,000 (2023 rate) of foreign income from US taxes. It’s the biggest tool in avoiding double taxation when you pay taxes.
• Foreign tax credit (FTC): This is a dollar-for-dollar reduction against your foreign earned income. For instance, if you pay $1,000 USD in taxes to Italy, you get a $1,000 credit on any US taxes you owe for that year. Here’s how you use it.
• Savings clause: Some tax treaties include a clause that reserves the right of either country to tax their citizens like the treaty didn’t exist. Here’s an example.
• Tax resident: When you become a tax resident of a country, that country reserves the right to tax you on your worldwide income. If your domicile is in the United States, then you’re a US tax resident. Each country has slightly different definitions for a tax resident within its borders.
• Totalization agreement: Every country on this list collects some kind of social security from its tax residents. The US reserves the right to collect social security from all of its citizens, regardless of where they live. If the US has a totalization agreement with another country, the expat only has to pay social security to one of the countries. Without a totalization agreement, you may be responsible for paying social security to both countries.

With that said, let’s review the tax agreements with these countries and see how to avoid paying double taxes while living abroad.

Expat Taxes in Australia

Totalization agreement: YES

Australia considers you a tax resident if you live here at least 183 days in a year, have your primary domicile, or pass the superannuation test. The tax treaty between Australia and the US means that US expats who earn money in Australia should not be double taxed and vice versa. This is because the country of residence gives you a tax credit for the taxes you’ve already paid to the other country. This process is called tax sparing.

Expat Taxes in Austria

Totalization agreement: YES

In Austria, tax laws require anyone who earns income in the country to file a tax return. This applies to both residents and non-residents, including expats. Non-residents (living in Austria less than 183 days/year) only pay Austrian taxes on income earned in the country, while residents have a progressive tax scale on all income. The US – Austria tax treaty grants breaks on a number of income types, such as dividends, interest, and capital gains. However, be careful as a US citizen; many of these tax treaty clauses may not be applicable to you, so look to claim foreign tax credits instead.

Expat Taxes in Belgium

Totalization agreement: YES

The US – Belgium tax treaty helps expats avoid double taxation on their income earned in Belgium. This means that if you pay Belgian taxes on your income, you can claim a credit for those taxes on your US tax return, reducing the US taxes you owe. It also works the other way around, reducing the amount owed on your Belgian tax bill. However, it’s important to note that the Belgian tax rates are higher than the US tax rates. So, even if you claim a credit for your US taxes on your Belgian tax return, you may still have to pay some extra Belgian tax. Speak with My Expat Taxes to help you file your US taxes properly while living abroad.

Expat Taxes in Canada

Totalization agreement: YES

The US – Canada tax treaty says you can claim a credit for any Canadian-paid income taxes on your US tax return. This reduces the amount of US tax you owe. And if you receive income for personal services performed in both countries, you’ll need to keep a complete record of your work days in each country. If you have excess foreign tax credit, you can carry it back one year and forward 10 years. This means that you can use it to reduce your US tax liability in those years. Speak with your expat tax accountant to find out how this works.

Expat Taxes in Czech Republic

Totalization agreement: YES

The income tax treaty prevents double taxation for US citizens living in the Czech Republic by eliminating or reducing US taxes on some types of income. The totalization agreement between the two countries allows expats to pay into the US social security for the first five years of residency, then flip over to Czechia going forward. Expats in Czechia can reduce or eliminate US taxes by using the FEIE and foreign housing exclusion, as well as foreign tax credit,. Note that Americans living abroad qualify for the FEIE only if you’re filing taxes on time with the proper forms. With its $120,000 exemption on earned foreign income, it’s the biggest tool to reduce your US tax bill.

Expat Taxes in Denmark

Totalization agreement: YES

Denmark considers you a tax resident if you live in the country at least 183 days in a calendar year or have a permanent home in the country. The US and Denmark have had a tax treaty as far back as 1948 to help their citizens avoid paying double taxes. Expats may be able to apply for a flat 27% tax rate on their salary, as well as the taxable value of any company car, phone, or health insurance. This special rate lasts for up to 7 years. You’ll still have to pay the 8% local municipal tax (LMC) while you have this tax rate. The foreign earned income exclusion (FEIE), foreign tax credit (FTC), and child tax credit will minimize any unpaid tax, though income limits apply. The FEIE allows you to exclude the first $120,000 USD of foreign income when you qualify.

Expat Taxes in Estonia

Totalization agreement: NO

Estonia considers you a tax resident if you live in the country at least 183 days in a 12-month period or have your center of vital interests in the country. The tax treaty accounts for business income, investment dividends, and royalties, in addition to the usual income tax—a flat 20% in Estonia that may have US expats paying into social security for both countries. Using the FEIE, the foreign tax credit, and others to offset foreign income may be key to keeping your expat tax bill low here. Speak with a tax pro for best results on your tax return.

Expat Taxes in Finland

Totalization agreement: YES

Finland considers you a tax resident if you’ve lived in the country at least six consecutive months or have your permanent home here. Expats can choose to pay taxes on their earned income at a flat rate of 35% for up to four years or on a progressive tax scale, ranging from 12.64% – 44%. Other considerations include local income tax, public broadcasting tax, and the foreign expert tax regime. As with the Czech Republic, you can reduce or eliminate your US expat taxes by using the FEIE, and foreign housing exclusion  as well as foreign tax credit,. We recommend that you hire a firm who’s an expert in taxes for expats.

Expat Taxes in France

Totalization agreement: YES

France collects taxes on expats who are considered tax residents, meaning your household or main employment is located there. It applies to most expats on a long-term stay visa. France taxes income on a progressive band system, ranging from 0% – 45%, applying other ranges on capital gains, inheritance, and property taxes. France doesn’t collect social security from US expats, though you would be responsible for other taxes. Use the FEIE and foreign housing exclusion, as well as foreign tax credit, to lower your US expat taxes as much as possible.

Expat Taxes in Germany

Totalization agreement: YES

Germany considers you a tax resident if you live in the country at least 183 days in a calendar year or have a dwelling here. The US – Germany tax treaty has a savings clause (like all other tax treaties) that allows the States to basically ignore the treaty, so claiming the tax breaks mentioned before will help out here. The FEIE will let you exclude up to $120,000 USD if you’re living most of your life abroad. You can even apply for child tax credits in Germany, too. While you’d pay into US social security if you’re working here, those contributions flip over to Germany after five years of employment. Expats who are self employed will want to consult their accountant to manage their tax situation.

Expat Taxes in Greece

Totalization agreement: YES

Greece considers you a tax resident if you’re in the country at least 183 days out of the year, own significant Greek assets, or send your kids to a Greek school. Greece charges taxes on worldwide income, though the US tax treaty helps to offset the bill that citizens abroad would pay back to the States. The country also has a totalization agreement, so you won’t pay double Social Security taxes if you’re self-employed here. Just use the previously mentioned tax credits and other tools recommended by your tax preparer.

Expat Taxes in Iceland

Totalization agreement: YES

Iceland considers you a tax resident if you’re in the country at least 183 days out of the year, making you taxable on your worldwide income. Under the tax agreement, expats can claim any Icelandic income tax against the US tax liability on the same income. The country also has a totalization agreement, so you won’t pay double social security if you’re self-employed here. Be sure to report any foreign accounts or investments to the IRS and avoid penalties on taxes owed. Use the FEIE and foreign housing exclusion, as well as foreign tax credit to lower your U.S. tax burden as much as possible.

Expat Taxes in Indonesia

Totalization agreement: NO

Indonesia considers you a tax resident if you’re in the country at least 183 days out of the tax year, making you taxable on your international income. Non-resident employees pay a flat 20% tax rate, while residents’ rates are progressive, paying up to 35% on total income. There’s no tax obligations on estates or gifts paid out. While the US offers tax breaks such as FEIE and foreign housing exclusion, as well as foreign tax credit. Indonesia offers deductions for occupational support expenses and pension, as well as allowances for yourself and family members. Expats can choose whether to pay into social security here, which is 2% of gross wages. Your expat accounting firm can explain more.

Expat Taxes in Ireland

Totalization agreement: YES

Ireland considers you a tax resident if you’re in the country at least 183 days out of the tax year or a total of 280 days across two tax years; this would make citizens abroad taxable on your global income. Ireland uses “tax rate bands” for its residents, applying a flat 20% tax for income below a certain threshold, then 40% on any income above that threshold. Expats do not pay into foreign countries’ social security schemes on the same income. The existing expat tax treaty protects from double taxation; however, be mindful again of the savings clause.

Expat Taxes in Italy

Totalization agreement: YES

Italy considers you a tax resident if you’re in the country at least 183 days out of the year, making you taxable on your worldwide income. Income taxes are applied at national, regional, and municipal levels, with additional tax paid for capital gains and public services. Italy has a different type of Totalization Treaty, where self-employed US citizens based in Italy continue to pay US social security taxes and not Italian. Use the foreign earned income exclusion and foreign housing exclusion, as well as foreign tax credit, to lower your expat taxes as much as possible.

Expat Taxes in Japan

Totalization agreement: YES

Japan likely considers you a tax resident if you have a long-stay visa, such as being here for at least a year as a bona fide resident. You pay taxes on a progressive scale up to 45%, with an additional 2.1% surtax and 10% local inhabitant tax also likely to be paid. Expats pay Japanese social security if employed by a Japanese company or live in Japan for over five years while working for a U.S. employer. Note that the U.S. does have a Savings Clause here, allowing them to tax expats like the majority of tax agreements didn’t exist. Use the common tax deductions mentioned above to minimize double taxation risk.

Expat Taxes in Latvia

Totalization agreement: YES

Latvia considers you a tax resident if you’re in the country at least 183 days out of the year, making you taxable on your international income. The individual tax rate scales to 31.4%, while a 15% tax generally applies to dividends, interest, and royalties. Latvia doesn’t charge an estate tax against expats. Deductions like FEIE, foreign housing exclusion, foreign tax credit, and child tax credits may help you lower your US expat tax burden as much as possible.

Expat Taxes in Lithuania

Totalization agreement: NO

Lithuania considers you a tax resident if you’re in the country at least 183 days out of the year or a total of 280 days across two tax years; this would make you taxable on your global income. There’s a 20% personal tax on income up to about €101,000 and 32% applied on income above that, while dividends and other income gets taxed at a 15% rate. A monthly tax-exempt amount (TEA) may offset tax burdens for lower-income individuals. Use the foreign earned income exclusion and foreign housing exclusion, as well as foreign tax credit, to lower your expat taxes as much as possible.

Expat Taxes in Luxembourg

Totalization agreement: YES

Luxembourg considers you a tax resident if you maintain a home or live here at least six consecutive months, making you taxable on all income. Luxembourg uses three tax classes: Class 1 for single people; Class 2 for married couples (includes civil partnership); Class 1a for single people with kids or retirees over age 65. The progressive tax rate scales from 8% – 42%. Luxembourg also applies a solidarity tax of 7% – 9%. Inheritance tax is levied on the Luxembourg portion of the deceased’s estate, regardless of where the benefactors live. Other taxes on foreign financial assets may qualify, as well. On top of the usual US deductions, expats may qualify for Luxembourg deductions like accidents, kindergarten costs, insurances, and personal allowances to lower your tax obligation. Consult your tax firm for more information.

Expat Taxes in Malta

Totalization agreement: NO

Malta considers you a tax resident if you’re in the country over 183 days a year, making you taxable on your global income. If you’re a resident for income tax purposes but don’t keep a domicile here, Malta will only tax your in-country income and capital gains. Expats pay a flat 15% tax to Malta on income from outside the EU, while other income is taxed on a progressive scale of 0% – 35%. Be sure to report any foreign financial assets to the Internal Revenue Service and avoid penalties. Note that the U.S. does have a Savings Clause here, allowing them to tax expats like the majority of tax agreements didn’t exist. Use the usual U.S. deductions and their tax forms to lower your tax burden further.

Expat Taxes in Mexico

Totalization agreement: NO

Mexico considers you a tax resident if you spend more than 183 days here within a year, have a home here, or if it’s the center of your vital interests. Mexico’s progressive tax rate ranges from 2% – 35%, while capital gains tax and property owner taxes may also be levied. Expats pay into U.S. social security for their first five years in the country, then make contributions to Mexico’s system. Mexico can also collect taxes on international rental income. Use tax forms like FEIE, foreign tax credit, child tax credits and foreign housing exclusion to lower your US tax burden accordingly.

Expat Taxes in The Netherlands

Totalization agreement: YES

Once you’ve lived in the Netherlands for four months, you become a tax resident. The Dutch collect three types of tax on income: income from work & home ownership (9.28% – 49.5%), income from substantial interest (26.9% on revenue from 5%-plus interest in a company), and investment income (32% on income over €57,000).

U.S. expats have a couple of tax breaks in the Netherlands (not necessarily the US). They may receive 30% of their salary for up to five years as a tax-free allowance under the 30% ruling—probably in lieu of paying about the same amount towards Dutch social security during that time. Social security payments switch over to the Netherlands after five years in the country. Note that the US does have a Savings Clause here. Use the foreign earned income exclusion and foreign housing exclusion, as well as foreign tax credit, to lower your expat taxes as much as possible.

Expat Taxes in New Zealand

Totalization agreement: NO

New Zealand considers you a tax resident if you spend more than 183 days here within a 12-month period or have a “permanent place of abode”. Expats get an exemption from resident taxation once they meet one of those requirements, where they only pay a flat 15% tax rate on New Zealand-sourced income for their first 48 months here. This tax break makes New Zealand an attractive expat destination.

Outside of the exemption above, the country taxes its residents at progressive rates, ranging from 10.5% to 39%. New Zealand doesn’t impose an official capital gains tax, though you may still be responsible for this under another tax regime. The lack of a totalization agreement means you may pay social security to both countries. Use foreign tax credit and the rest to lower your US expat tax burden and fully take advantage all applicable US expat tax breaks when you file taxes.

Expat Taxes in Norway

Totalization agreement: YES

Norway considers you a tax resident if you live in the country over 183 days in one tax year or for more than 270 days during any 36 month period. Income and capital get a flat 22% tax rate, with progressive rates applied on top that range from 1.7% – 17.4%. Municipal and state wealth tax rates average out to just over 1%. Property taxes are set by municipality and range from 1% – 4%.

Employed first-year expats may qualify for the Pay As You Earn (PAYE) program, applying a flat 25% tax rate and eliminating the need for an individual tax return. Norway’s totalization agreement with the U.S. keeps you from paying social security to both countries. Use the foreign earned income exclusion and foreign housing exclusion, as well as foreign tax credit, to lower your expat taxes as much as possible.

Expat Taxes in The Philippines

Totalization agreement: NO

The Philippines consider you a tax resident if you spend at least 182 days here in a calendar year, establish a primary domicile, or have previously filed as a resident. Both residents and non-residents pay the same tax rates, which scale from 0% – 35% on their income. Revenue from foreign financial institutions may also get taxed.

Expats should use the standard U.S. tax deductions mentioned above; otherwise, you may end up owing standard taxes to both countries, which could be substantial. Also, the U.S. and Philippines don’t have a totalization agreement. Therefore, you’d pay self-employment taxes towards U.S. social security, even if you don’t owe any U.S. income taxes as a self-employed person in the Philippines. Speak with an expat tax preparer when you’re ready to file taxes.

Expat Taxes in Poland

Totalization agreement: YES

Poland considers you a tax resident if you spend over 183 days here in a fiscal year or have a center of personal or business interest in the country. Personal income gets taxed at 12% up to $29,500 USD, then 32% on income above that amount. A flat 19% tax gets paid on capital gains. A 9% health insurance contribution gets withheld from employee income.

The totalization agreement allows expats to only pay social security to one country. Poland also offers child relief deductions on their taxes, which scale upwards by your number of children. Use the foreign earned income exclusion and foreign housing exclusion, as well as foreign tax credit, to lower your expat taxes as much as possible.

Expat Taxes in Portugal

Totalization agreement: YES

Portugal considers you a tax resident if you spend over 183 days here in a 12-month period (consecutive or not), or if you maintain a residence in the country at any time in a 12-month period. Their progressive income tax rate scales from 14.5% to 48%. However, their Non-Habitual Residence (NHR) tax regime grants 10 years of tax breaks to new expats, which include a flat 20% income tax and no foreign income taxes on global income. This is one of the best income tax treaties for pensioners looking to stretch their retirement dollars even further; however, be aware of the saving clause. You may even be able to apply the Foreign Earned Income Exclusion, too, and lower your expat taxes even further. Your expat tax firm can advise.

Expat Taxes in Romania

Totalization agreement: YES

Romania considers you a tax resident if you spend over 183 days here in a 12 month period or you’re domiciled in the country. A flat 10% tax rate is applied to your taxable income, though different rates may apply to dividends, income from selling a home, and gambling. The same rate applies on capital gains taxes and health insurance contributions if you’re employed. One benefit for pensioners: Romania cannot make expats pay taxes on their U.S. social security. However, you’ll want to report any foreign financial accounts when you’ve filed taxes to avoid possible penalties. Use an expat tax firm when living abroad for best results.

Expat Taxes in Slovakia

Totalization agreement: YES

Slovakia considers you a tax resident if you’re here over 183 total days (excluding study or health treatment) in a calendar year or have a permanent residence in the country. Slovakia uses a two-tier tax rate, applying a 19% rate on income below $42,000 USD and 25% on income above it. Capital gains come in at 19% for expat taxes, while you’d owe taxes of 7% on dividends, regardless of country. Other tax benefits include a 50% deduction on mortgage interest paid for five years, but only if you’re under 35, as well as tax bonuses for dependent children. Use the Foreign Earned Income Exclusion (FEIE) and foreign tax credit to get dollar for dollar credit when you file your federal tax return.

Expat Taxes in Slovenia

Totalization agreement: YES

Slovenia considers you a tax resident if you’re here over 183 days in a taxable year or have a permanent residence in the country. Personal income gets taxed on a five-bracket scale, ranging from 16% – 50%. Capital gains, interest, dividends, and rental income all see a flat 25% tax rate; this includes foreign assets and domestic ones. Slovenia offers several tax benefits to offset your burden, including allowances for dependents, students, and residents with disabilities. These deductions, along with the US tax breaks like the foreign earned income exclusion, should dramatically reduce your expat tax liability.

Expat Taxes in South Africa

Totalization agreement: NO

South Africa considers you a tax resident if you have a full-time residence here. You can also become a tax resident if you’ve been here over 91 days total in the current tax year and the last five tax years, totaling at least 915 days. The country levies several taxes for expats, including income, capital gains, investment income, and estate tax. These rates may be higher than the US tax equivalents, so consult your tax professional to avoid double taxation when it’s time to file taxes.

Expat Taxes in South Korea

Totalization agreement: YES

South Korea considers you a tax resident if you’re here at least 183 days in a tax year or have your primary residence. National income taxes can range from 6% – 45% of net income, with a local income tax collecting 10% of the national rate (.6% – 4.5%). There’s a significant break for expats, though: if you’ve lived in Korea for five years or less during the last 10 years, you only pay Korea-sourced income. This could be especially attractive to expats on a digital nomad visa, particular those with self-employment income.

South Korea offers a number of tax credit options. There’s tax credits for dependents, charitable donations, education, mortgage interest, insurance premiums, and more like in the US. Speak with a professional when it comes time for your US tax filing to insure you take advantage of these credits and other US tax options to minimize double payment on your tax returns.

Expat Taxes in Spain

Totalization agreement: YES

Spain considers you a tax resident if you’re: present over 183 days in a calendar year; have financial interests in the country; have a Spanish spouse or dependent children. The country applies a progressive income tax scale for most residents, ranging from 19% – 47%. Digital nomads are exempt from the wealth tax and pay a flat 24% rate, so long as 80% of their income comes from outside Spain.

Note that the U.S. does have a Savings Clause here, so they can opt to ignore the majority of the tax treaty. However, the totalization agreement exempts expats from paying double on social security as a self-employed individual, while the foreign tax credit (FTC) give you dollar for dollar credit on your US tax return for taxes paid to Spain. Consult your tax advisor on how foreign assets should be handled in this case, particularly for digital nomads and the self-employed.

Expat Taxes in Sweden

Totalization agreement: YES

Sweden considers you a tax resident if you live here at least six consecutive months, are permanently domiciled, or were a previous long-term resident with “essential ties” to the country. Swedish income taxes get levied at the national level from 0% – 20%, and at the local level on an average rate of 0% – 52%. Capital gains apply a flat 30% tax rate. Self-employed expats may be charged differently.

According to the totalization agreement, expats working for a US company pay US social security up to five years, then switch to paying Swedish contributions. Expats working for non-US employers pay into Swedish social security. Both countries’ social security withholdings average out to about 7%. Consult a professional each tax year to insure your adjusted gross income gets taxed properly and avoid paying double.

Expat Taxes in Switzerland

Totalization agreement: YES

Switzerland considers you a tax resident if you’ve worked in the country at least 30 days or been living here for at least 90 days. Under this rule, students studying in Switzerland would also be considered tax residents. Most expats, including retirees, pay taxes on a pay-as-you-earn (PAYE) basis; this means you won’t have to file a Swiss tax return unless your exceed $130,000 USD. Switzerland applies progressive tax rates affected by many factors; speak with your tax professional for questions on specifics here.

All permanent resident contribute to the Swiss social security plan; due to the totalization agreement, you might be able to avoid paying US social security payments while living here as a self-employed individual. Be sure to use the foreign earned income exclusion and other deductions when filing your tax returns. For best results, consult your accountant to avoid paying double taxes each tax year.

Expat Taxes in Thailand

Totalization agreement: NO

Thailand considers you a tax resident if you live in the country at least 180 days in a given tax year. Ignoring factors like marital status, Thailand’s progressive tax brackets focus solely on income, scaling from 0% – 35%. There’s no capital gains tax against securities sales on the Thai stock exchange. A lack of totalization agreement means you could end up paying social security to both countries while living abroad. Self-employed people in particular should be aware of this, as they’d pay double what a Thai-employed expat would. Consult your accountant for insight on your filing status and deductions to avoid double taxes.

Expat Taxes in United Kingdom

Totalization agreement: YES

The United Kingdom considers you a tax resident if you live in the countries at least 183 days in the year or pass one of the other automatic residence tests. The UK taxes income in progressive bands at 20%, 40%, and 45%. Dividends get taxed at the individual’s highest tax band. Changes to the UK’s internal revenue code have made it difficult to establish clear answers on capital gains and social security payments, though there is a UK tax treaty agreement with the US that allows even US citizens to take advantage of social security and pension contribution benefits. Consult a professional when handling your tax filing as an expat here.

Expat Taxes in Uruguay

Totalization agreement: YES

Uruguay considers you a tax resident if you live in the foreign country at least 183 days in a calendar year; if you’re a tax resident, then so are your spouse and dependents. Uruguay applies a progressive income tax rate on locally-sourced income, ranging from 0% – 36%. However, the country usually only taxes income from within the country, not foreign income. This means that your retirement income wouldn’t be taxed under normal conditions. No inheritance tax applies here, while property taxes range from 0% to .3%, depending on property value.

As of September 2023, the US and Uruguay do not have a tax treaty, meaning you could be open to double taxation. The two countries do have a totalization agreement, preventing you from paying social security to both countries. Take advantage of the US tax credits mentioned in the opening section to minimize your tax burden for both countries.

Expat Taxes in Vietnam

Totalization agreement: NO

Vietnam considers you a tax resident if you live here at least 183 days over 12 consecutive months or have a permanent residence in the country. Employment income gets taxed on a progressive scale, ranging from 5% – 35%. Dividends pay a 5% tax. Capital gains pay 20% on net, while inheritances are subject to a 10% tax. Mandatory insurance contributions, charitable giving, and qualifying dependents are deductible under the Vietnamese system. Consult your tax advisor when submitting your tax return to insure you apply foreign tax credit, the FEIE, and any other qualified deductions to take advantage of the US tax treaty.

Wrapping Up

So there’s a brief overview of the US tax treaties and most of its treaty partners. This is for general review purposes and isn’t meant to convey tax advice. For the best assistance on filing taxes abroad, reach out to My Expat Taxes. Their team will gladly help with your tax returns, both domestic and international.