International taxation has its own language. Terms like FEIE, NHR, CFC, PE, and territorial taxation appear constantly in expat tax discussions. Understanding these terms is essential for making informed decisions.
This glossary provides clear definitions of 100+ tax terms relevant to expats, digital nomads, and international workers.
Allows US citizens/residents abroad to exclude up to $126,500 (2024) of foreign earned income from US taxation. Requires meeting Physical Presence Test (330 days abroad) or Bona Fide Residence Test. Filed on Form 2555.
Dollar-for-dollar credit against US tax for income taxes paid to foreign governments. Alternative to FEIE for high-tax country residents. Filed on Form 1116.
FinCEN 114. Required if aggregate value of foreign financial accounts exceeds $10,000 at any time during the year. Filed separately from tax return to FinCEN.
Law requiring US persons to report foreign financial assets (Form 8938) and foreign banks to report US account holders to IRS. Thresholds: $200K/$400K for expats.
Foreign mutual fund or investment company. Subject to punitive US tax treatment unless elections made. Often makes foreign funds impractical for US persons.
IRS form to claim Foreign Earned Income Exclusion and Housing Exclusion/Deduction.
IRS form to claim Foreign Tax Credit for taxes paid to foreign countries.
Statement of Specified Foreign Financial Assets. Filed with tax return if thresholds met.
3.8% surtax on investment income for high earners (over $200K single/$250K married).
15.3% tax on self-employment income for Social Security/Medicare. Not avoided by FEIE.
Tax regime offering 20% flat rate on Portuguese income and 0% (or 10%) on most foreign income for 10 years. Closed to new applicants from 2024.
Special tax regime allowing new Spanish residents to pay 24% flat tax on Spanish income (up to €600K) for 6 years. Named after footballer David Beckham.
Incentivo Fiscal à Investigação Científica e Inovação. Post-NHR regime offering 20% flat rate for qualified professionals.
EU document proving you remain covered by home country's social security system while working temporarily in another EU country. Prevents double social security contributions.
EU Directive on Administrative Cooperation. Requires reporting of cross-border tax arrangements to tax authorities.
EU rules implementing anti-avoidance measures including CFC rules, exit taxation, and hybrid mismatches.
CAS: Contribuția de Asigurări Sociale (pension contribution, 25%). CASS: Contribuția de Asigurări Sociale de Sănătate (health contribution, 10%). Total: 35%.
5.5% surcharge on income tax (Solidaritätszuschlag). Originally for reunification costs.
Osaühing. Estonian private limited company. Popular with e-Residents. 0% corporate tax on retained profits.
Consumption tax applied at each stage of production. Standard EU rates: 17-27%.
A fixed place of business in a country that triggers corporate tax obligations. Can be created by offices, employees with contract authority, or certain activities.
Foreign company controlled by domestic shareholders. Many countries have CFC rules that tax shareholders on company profits regardless of distribution.
Bilateral agreement between countries to prevent double taxation. Determines which country taxes what income and provides reduced withholding rates.
Treaty provisions determining tax residence when person qualifies as resident of both treaty countries. Sequential tests: permanent home, vital interests, habitual abode, nationality.
Common threshold for tax residence. Spending 183+ days in a country typically makes you tax resident. Counting method varies by country.
System where only domestic-source income is taxed. Foreign income is exempt. Used by Panama, Costa Rica, Hong Kong, Singapore.
System where residents are taxed on global income regardless of source. Used by US, UK, Germany, France.
Taxation based on citizenship regardless of residence. Only US and Eritrea use this system.
Source country: where income arises. Residence country: where you live. Treaties allocate taxing rights between them.
Domicile: permanent home, often from birth (UK concept). Residence: where you currently live. Different legal concepts with different tax implications.
Georgian tax regime allowing freelancers and small businesses to pay 1% turnover tax instead of 20% income tax. Limit: GEL 500,000 revenue.
Retiree visa program offering residency based on pension income. Often includes discounts and tax benefits.
Digital identity program allowing non-residents to establish and run EU companies remotely. Not a visa or tax residence—purely business tool.
Tax incentive exempting 50-90% of employment income for new residents. Duration: 5-10 years depending on circumstances.
Non-domiciled resident. Tax regime allowing remittance basis taxation—foreign income only taxed when brought into country.
Residency permit obtained through investment (property purchase, business investment, government bonds). Available in Portugal, Spain, Greece, others.
Bilateral agreement preventing double social security taxation. US has agreements with ~30 countries.
Document proving you pay social security in one country, exempting you from paying in another (under totalization agreement or EU rules).
Tax on earnings from employment, self-employment, and sometimes investments. Progressive (increasing rates) or flat (single rate).
Payments funding pensions, healthcare, unemployment insurance. Often split between employer and employee. Can exceed income tax.
Tax on profit from selling assets (stocks, property, crypto). Rates vary; some countries (Hong Kong, Singapore) have none.
Tax on dividends received from company shares. May be at special rates or included in income tax.
Tax deducted at source before payment (on dividends, interest, royalties). Treaties often reduce rates.
Tax on wealth transferred at death. Inheritance tax: paid by recipient. Estate tax: paid by estate.
Annual tax on net assets. Rare but exists in Switzerland, Norway, Spain (partial).
Tax triggered when leaving a country. Often treats assets as sold at departure (deemed disposition). Used by US, Canada, Germany, France.
Tax on documents or transactions, commonly property purchases.
Annual tax on property ownership. Varies significantly by location.
US form for foreign persons to claim treaty benefits and reduced withholding on US-source income.
US form providing taxpayer identification number. For US persons receiving payments.
US Individual Income Tax Return. Main annual tax return for US persons.
US form for reporting self-employment income and expenses.
US form for reporting ownership in Controlled Foreign Corporations (CFCs).
UK tax return system for self-employed, high earners, and those with complex taxes.
UK year-end statement from employer showing total pay and tax deducted.
Annual declaration of income and calculation of tax owed. Required in most countries for self-employed or complex situations.
Quarterly tax payments made during year to avoid underpayment penalties. Required for self-employed and those without withholding.
Request for additional time to file tax return. Usually extends filing, not payment deadline.
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