Country Information
General Information

An Expat Tax Primer

The basics of expat tax comes down to two really simple rules. (And then gets horribly more complicated as you expand outwards)

How do we deal with tax as an expat teacher?

Although it’s slightly different for each country, the basics are reasonably simple (well for tax at least).

Again we’re making some assumptions. We’re assuming you don’t have a bunch of different income sources from different countries, we’re assuming you have a single job or perhaps a couple part time positions which earn you a salary in the country you’ve moved to. If you have a bunch of investments paying you money, you’ll be needing some professional tax advice.

There are two possible places you might end up paying tax:

  1. Your home country
  2. The country you’ve moved to.

For each country we have a rule we can follow to decide if we need to pay tax.

Two rules for working out if you need to pay tax

Rule 1: You’ll almost always have to pay tax in the country you’ve moved to.

Why? Because the country we move to is the country that we’ll be earning our income in. And income earned in a country is nearly always taxed in that country, however long you’ve lived there.

The second rule is:

Rule 2: Whether or not you have to pay tax in your home country, usually depends on your residency status

Taxes pay for services, infrastructure, government etc. You benefit from them if you're living in the country. So to follow on from that, if you're living in the country and getting benefit from them (i.e. you're a resident) you should pay taxes for them. If you're not, then you shouldn't have to pay taxes.

Rule 1: Tax Abroad - Country Guides

Expanding on these two points start’s to get very country specific at this point. To learn about how much tax you’ll have to pay in the country you moved to, head to the knowledge base entry for that country (only China & Japan at the moment) and go to the tax and social security page.

If you want more information or the country you're going to work in hasn't got a knowledge base entry yet, then we can use the HR documents that large companies put together for their expat employees. Although they still require some work they're far better than most official tax resources and you can be confident their information is good.

My favourite are:

KPMG: Pick a country from here.
HSBC: Google “HSBC expat tax *insert country here*. You should find a pdf that looks something like this (this one is for China).

Rule 2: Tax at Home - Country Guides

To discover whether or not you have to pay tax at home, we’ve put together three articles for UK, USA and Australia (more in the works), which will help you understand whether or not you have to pay tax.

US Expat Taxes: Do I have to pay tax abroad and how much?

When it comes to paying tax as an expat, the US tends to be quite strict, unlike most countries it taxes nearly all of it's expats. Click here to read it.

UK Expat Taxes: Do I have to pay tax abroad and how much?

The UK has the clearest rules when it comes to taxing expats, it has a clearly defined set of rules and spells them out. Click here to read it.

Australia Expat Taxes: Do I have to pay tax abroad and how much?

Australia has a little bit of a black box when it comes to deciding how to tax expats, but the official government website is remarkably clear. Click here to read it.

Getting taxed twice

Could you have to pay tax in two countries?

Yep unfortunately this is a problem, but it’s a problem that countries have done their best to solve.

Countries create double tax treaties with each other, to make sure that people don’t get taxed twice. (Well and also to make sure people don’t avoid tax).

Double tax treaties usually work in one of three ways:

  • You pay tax at home and get relief from that tax in the country you moved to
  • You pay tax in the country you moved to and get relief at home.
  • You pay tax in the country you moved to and declare this tax as already paid in your home country.

The relief could be complete exemption, tax credits etc.

Here's a really standard tax disclaimer: We're not tax lawyers, this isn't official tax advice. You're responsible for what you do, if you're unsure of anything you'll need to talk to a proper tax lawyer and all that good stuff. I'm sure you knew all this anyway.