Cross-Border Tax Concepts Illustrator
Illustrate Residency & Tie-Breaker Rules
Determine potential tax residency based on common tests and illustrate how treaty tie-breaker rules might apply in dual residency scenarios.
Note: This illustrates common residency tests (like the 183-day rule) and typical treaty tie-breaker logic. Actual determination requires analyzing specific facts, domestic laws of both countries, and the exact wording of the applicable tax treaty. US persons may have different rules (e.g., citizenship-based taxation).
Illustrate Common Income Sourcing Rules
Show the typical country where different types of income are considered "sourced" based on international principles.
Note: These are general sourcing principles. Specific domestic laws and tax treaty articles can modify these rules. Permanent establishment rules significantly impact business profit sourcing (not illustrated here).
Illustrate Double Taxation Relief Methods
Compare how the Exemption method and Foreign Tax Credit (FTC) method might work conceptually to alleviate double taxation.
Note: This is a highly simplified illustration. Actual Exemption methods can vary (e.g., exemption with progression). Actual FTC calculations involve complex limitations based on income categories ("baskets"), sourcing rules, carryovers, and specific country regulations.
Illustrate Treaty Withholding Tax (WHT) Concepts
Show how a tax treaty might potentially reduce the withholding tax applied by the source country on payments to a non-resident.
Note: Illustrative only. Actual statutory and treaty WHT rates vary significantly by country pair and income type. Claiming treaty benefits often requires proving residency (e.g., via TRC) and meeting specific conditions like beneficial ownership. Always consult the specific treaty.