jgombos

Do you folks just check to see if a tax treaty is present, or are some tax treaties significantly sweeter than others?

Obviously big businesses have to examine the tax treaties, but I'm more interested from the perspective of an individual.

I have heard there are deals out there such that someone can get out of taxes in both countries.. like your Vanuatu cases. But I'm not sure if that's just blather.

WorldWeary

There can be differences in tax treaties and there can also be differences in how a country taxes you. For example you can have a UK pension paid into your Cyprus bank account and taxed in Cyprus rather than in the UK. Cyprus only taxes a pension 15%.

Really each country is different from a tax perspective so it certainly does make sense to look into it before jumping ship.

Loco

You can avoid some taxes but it is not easy to do so and is a very complex area.

Best
Loco

WorldWeary

Oops. Pensions are only taxed at 5% in Cyprus, not 15%. Slight difference.

Cyprus and the UK have a pension agreement. That means if you are resident in Cyprus you can have your UK pension paid directly into your Cyprus bank and taxed in Cyprus at 5% vs. the minimum of 22% (after tax free allowance) in the UK. Big difference. On an old age pension of £200 per month (£9600) per year you would pay income tax of around £1100 in the UK. In Cyprus you would pay £480. That's on your government pension. If you also had £9600 per year of private pension you would pay an additional £2212 in taxes in the UK on that but only £480 in Cyprus! So a total of £3312 in the UK vs. £960 in Cyprus. A difference of £2352 in your pocket!

jgombos

Where do I start? I just want to be told where it makes sense for an American s/w engineer to work.. If I try to sort through massive archives of tax law documentation for multiple countries, I'll probably misinterpret something, or overlook something important. With all the outsourcing and globalization that's going on, isn't there a source of information for non-CPAs / non-business people that lays everything out? I'd like to know which countries have the most favorable tax treaties for Americans.