Archive for Tax Treaty

Tax Treaties And Exempt Income: The U.S.-Czech-Republic Tax Treaty; The U.S.-Romania; The U.S.-Bulgaria Tax Treaty; The U.S.-Italy Tax Treaty; The U.S.-Poland Tax Treaty

Tax Treaties and Exempt Income

Most United States tax treaties provide an exemption for certain categories of employees, including teachers, students, and researchers.[1]

Nonresident alien teachers, students, and trainees who are entitled to treaty exemptions from U.S. tax on part or all of their salary for working in the United States are generally required to file Form 8233 in order to claim the exemption.[2]

A teacher or trainee is an individual, other than a student, who is temporarily in the United States under a “J” or “Q” visa and substantially complies with the requirements of that visa.  A person is considered to have substantially complied with the visa requirements if they have not engaged in activities that are prohibited by U.S. immigration laws and could result in the loss of their visa status.

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United States Income Tax Treaties – A to Z

IRS Tax Treaties

The United States has tax treaties with a number of foreign countries. Under these treaties, residents (not necessarily citizens) of foreign countries are taxed at a reduced rate, or are exempt from U.S. taxes on certain items of income they receive from sources within the United States. These reduced rates and exemptions vary among countries and specific items of income. Under these same treaties, residents or citizens of the United States are taxed at a reduced rate, or are exempt from foreign taxes, on certain items of income they receive from sources within foreign countries. Most income tax treaties contain what is known as a “saving clause” which prevents a citizen or resident of the United States from using the provisions of a tax treaty in order to avoid taxation of U.S. source income.

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Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS

On June 7, 2017, over 70 Ministers and other high-level representatives participated in the signing ceremony of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (“Multilateral Instrument” or “MLI”).

Signatories include jurisdictions from all continents and all levels of development. A number of jurisdictions have also expressed their intention to sign the MLI as soon as possible and other jurisdictions are also actively working towards signature.

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