scrb11

Never said anything about picking and choosing which taxes to pay. If the tax situation seems convoluted or disadvantageous (paying taxes twice on the same income) then I will obviously make the decision accordingly on whether to go live in a given country.

If an EU resident/citizen moves to a different EU country to work there, is she liable to pay taxes to both countries?

She's earning income in a second country so she should pay income taxes in that case. But what claims do the first country have on her income? If she kept property in the first country, sure she'd paid property taxes but what else?

Traveler_Nick

You need to look at the relevant tax treaty. Virtually all country pairs have them. Certainly all G20 countries do.

First issue is where is she actually tax resident? The treaty provides rules on this. Just moving doesn't always mean moving tax residence.

What kind of property? Real estate? That generates income? Standard treaty rule is it's first taxed by the country the property is located in. The other country can if it wants then tax but there is almost always a credit for the first tax paid.

Investments? Capital gains are taxed in the country of tax residence. Dividends are usually subject to a withholding. This is in the treaty. The country of residence than applies it's rules.

scrb11

It must be a common situation right?

Either an Italian decides to go to school in Germany and decides to work and live there.

Or Polish and Eastern Europeans who go the UK, while they were still in the EU, to either do seasonal work (agriculture) or find jobs that keep them there for years.

Or what about say someone in Luxembourg crossing the border every day into France for work? They live in one country but their job is across the border.

In all these situations, are two countries going to have claims on the worker's income for taxation purposes?

Even with tax treaties, are there bureaucratic requirements for the workers to document that their income was below some threshold to qualify for tax credit from one while owing taxes to the other?

Traveler_Nick

The only real issue is that the US treats its citizens like tax residents no matter where they live in the world. That's different than the vast majority of the world.

You're just clouding the issues bringing up all those examples. Do any of them relate to you?

Work income is taxed usually in the country the work is done in. You won't be working.

The tax credit / offset is related to how much you paid the first country. Assuming you're asking about the tax credit related to taxes paid abroad. You don't qualify you just get some sort of offset. In some countries it's 1 to 1. In other countries it can be different.

Tulips

Rules are different in every country. For example a quick google about France:
In order to assist with the determination of residency status the general rule that is applied is that if you spend 183 days per calendar year in France then you are deemed to be resident.

You can think you are not a resident and will not be liable for taxes, but the local authorities may decide differently.
There are plenty of examples in Europe where people officially are residents of a low-tax country, but in reality they spend most of their time somewhere else. Some get away with this, but if the tax authorities determine that you actually live in the Netherlands instead of Monaco, for example, you are in for some pretty hefty fines. Nowadays it's pretty easy for the authorities to determine where you actually live.

Before moving anywhere, I'd take advise from an expert in these matters.

bilboburgler

I'm sorry I started this element of the discussion, I was really just teasing.
Pay your vat ;-)

Heimdall

Anyone who owns or rents a home in the UK is liable to pay council tax, which funds local services such as police and fire service, rubbish collection, road maintenance, parks and recreation, etc. If one rents a home while living in the UK you pay council tax either directly or through your rent, and as far as I know council tax isn’t deductible when you itemise expenses on the IRS 1040 form.

VAT is 20%, much higher than sales tax levied in US states. Fuel for your car, tobacco, and alcoholic beverages are taxed even higher. Currently road fuel is taxed at 57.95 pence per litre, and 20% VAT is levied on both the cost of the product and the 57.95p tax.

Not every UK citizen pays income tax (if they fall below the income threshold), but is still entitled to benefits. A US citizen residing short term in the UK won’t be claiming for child benefits, social welfare, council owned housing, and other benefits that consume a large proportion of UK taxes.

Tax treaties exist to insure no one is taxed twice for the same income. An expat who earns income in the UK is taxed by the UK, and can claim an exemption for that when filing taxes with the IRS. I feel it is unfair for anyone wishing to spend a year in Europe to be called a “freeloader”.

scrb11

Thanks for that explanation. I wasn't sure if there was the equivalent of US property taxes to fund local services but it makes sense that there would be.

Americans pay property taxes, which fund schools, whether or not they have children still in school. If they rent, then part of their rent goes towards property taxes paid by their landlord.

But I understand that some countries may define residency at a relatively low threshold for determining income tax liability so I will have to research that more.

menachem

Not every European country is the UK, and tax regimes vary widely throughout the EU. However, anyone who comes to "Europe" for a year, is essentially freeloading and making use of facilities that were paid for by their neighbours. If "expat" is a nicer term, I'll use that.

Heimdall

Menachem wrote: “Not every European country is the UK, and tax regimes vary widely throughout the EU.”

That’s true, and I wrote about what I know, since I live in only one European country. No one is talking about avoiding tax when you pay what you owe to the country where you earn your income. Some Europeans are able to avoid taxes in their home country by moving to a tax haven, but that’s not possible for Americans.

Tourists help subsidise loss making services that benefit the local population when they pay for admission to museums and theatres, local transport, etc.

Traveler_Nick

Not if they pay less than the marginal cost. In addition when talking about stuff like transit many of those services are overloaded.

Heimdall

You shouldn’t make generalisations. What is the marginal cost of one extra person visiting a museum? With some museums admission is free, while others charge for entry. Citizens sometimes get reduced entry fees while tourists pay full whack.

Transport services in some cities are overloaded, but where I live in the countryside buses are running almost empty, and fare paying passengers are more than welcome. Ferries in the Greek Islands run year-round even in winter when there are few passengers. Revenue during the tourist season helps keep the ferries running, benefitting the island population.

Heimdall

Bilboburgler wrote: “Are you still going to claim back your VAT at the end of the stay?”

You can only claim VAT back on goods you take out of the UK/EU, and then only for purchases made in the last three months before leaving. You can’t claim back VAT for services or for anything you consume while in the UK/EU.

bvlenci

Why don't you ask the IRS that question? The USA requires their citizens to pay taxes on any income they have in any part of the world.

Sassafrass

Not always. There are exceptions where a person has legal residency and a job in another country that has agreements with the US about the taxation of money earned by working for a company in that country. I know this because DD has lived and worked in several countries for many years at a time. She files in both countries, but has always paid only in the country where she has residency and is earning money. She has a choice of paying SS to the US for enough quarters to participate, I do not know if she still does that. Does not matter as she does not plan to ever return to the US.

thursdaysd

But she still has to file in the US, and she is still liable for US tax on income not covered by a tax treaty or the foreign earned income exclusion. This is not true of other countries. (Well, there is just one other, which I forget. Maybe Ethiopia...) I'm a UK and US citizen, but as a US resident I haven't filed a UK tax return in decades.

Tulips

The US is an exception is requiring it's citizens to file tax returns even if they have never lived in the US.
Boris Johnson had to pay capital gains tax in the US on the sale of his London home, even though he was living in the UK.

Sassafrass

That does not seem fair or right.

thursdaysd

Of course it isn't, but getting it changed is extremely unlikely although there is a bill before Congress. Worse, it applies green card holders too!

See: https://www.irs.gov/individuals/inte...-living-abroad and https://www.americansabroad.org/us-t...ummies-update/

Some people renounce their citizenship, but that costs money, too. (As does getting help with the tax paperwork.)

Christina

It isn't totally unfair, I don't mean about Boris Johnson, I didn't even know he was a dual citizen, what a surprise. But US citizens having to pay some taxes even if not living in the US doesn't seem that outrageous to me. They are getting some benefits of that citizenship and that passport, and I think it is the duty of people to contribute to the support of their government and its services. Citizenship means something. Now I wouldn't think it fair if they paid the exact same income tax rates as if their were US resident, but they don't, there are exclusions based on taxes paid elsewhere and also some exemptions for wages earned elsewhere if you are resident there permanently, and also some exclusions for contributions to govt. pensions elsewhere. I think it would be unfair for people to pay nothing if they are citizens if they have income at a high level, of course.