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- 🐧 Save thousands on taxes by living abroad (Part 2)
🐧 Save thousands on taxes by living abroad (Part 2)
INSIDE: Dubai, Netherlands, and Under-the-Radar Expat Tax Schemes
Dexter Zhuang
November 12, 2023 • Estimated Reading Time: 11 minutes
If you have a side hustle, I’d appreciate your help to take this 3-minute survey, so I can feature a few case studies in my next article!
Today in 10 minutes or less, you’ll learn:
🇦🇪 Dubai Zero Income Tax
🇳🇱 Netherlands Preferential Tax Schemes
🤩 Under-the-Radar Expat Destinations
🤖 Announcing MoneyAbroadGPT: Your Money Coach
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Tax Tip #2: If you’re already paying taxes in your host country, you may be eligible for Foreign Tax Credits to offset your US tax liability, essentially preventing you from being double-taxed on the same income.
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🗺️ Save thousands on taxes by moving abroad (Part 2)
🗽 (Friendly) note on dual taxation
Before we begin, I received an email from an Aussie reader last week in response to our Part 1 edition on tax benefits and Portugal:
“Great insights. One thing to note is that certain countries require their citizens to pay tax regardless of which country they live in. And most countries these days have a dual taxation treaty.
You may want to make your readers aware of dual taxation and paying taxes on overseas income if you are a citizen of countries like the US and Australia.
I have to decline a job offer in Dubai because of this problem.”
Our fellow reader raises an excellent point. Let’s break it down.
🇺🇸 American expats
As a US citizen living in Singapore, I have paid taxes to BOTH the US and Singapore tax authorities.
(Fun fact: The US is one of three countries in the world that enforces citizenship-based taxation. Other two are North Korea and Eritrea—great company right?)
Not all countries even have a tax treaty with the US (Singapore doesn’t), and even if they do, it may not prevent all dual taxation. So as an American abroad, you may very likely have to pay taxes in both countries (although you can apply credits and exclusions).
Protip: If you need help filing your US expat taxes, send a message to my personal tax preparer and he’ll reach out to help.
🇦🇺 Australian expats
For Oz, my wife is Australian and our friend have mentioned Australian tax residents have worldwide taxation.
My understanding is that it’s critical to prove to the Australian tax authorities that you are truly overseas and have no plans to come back.
I’m less knowledge about this, so if any Oz experts are reading - give me a shout.
🌎️ Other expats
If you’re wrestling with the insanity that’s double taxation, here are some questions that I would ask:
While you’re working abroad, are you considered a tax resident for your home country?
What are the income and investment tax policies for tax non-residents vs residents for your home country?
What is the treatment of foreign-sourced income and investments you make abroad based on your status (non-resident vs resident)?
Do your own research, but find a trusted tax professional if you can. It’ll save you a buttload of time and hassle.