2 ms·
> How do taxes work in this case? Am I supposed to be taxed based on my home country, the company's home country or the country I am currently residing in? I'm
by pimterry 10y ago
> How do taxes work in this case? Am I supposed to be taxed based on my home country, the company's home country or the country I am currently residing in?
I'm not a tax accountant, but I've spent a reasonable while looking at this and talking to various people in similar situations.
Step one: work out where you're tax resident. You're typically tax resident in the place you spend more than 6 months of the year. There are some more complex per-country rules if that doesn't cover you though, and lots of tie breakers on things like where your ties are (where your business/family are located) and how many days you spent working in the countries involved. This can be complicated and gets relatively subjective in the tricky cases. If it's truly ambiguous and you're not a super high earner, you can probably pick any plausible option without much risk.
Step two: pay taxes on income earned in the country(ies) when you earned it (i.e. where you currently are working, if you're working remotely), plus taxes on your whole annual income wherever you're tax resident. There are double-taxation treaties between most nations that allow you to claim it back. If you're American, I think you also have to pay taxes in America, on top of the above (but I'm not American, so I'm not sure on that). An example:
- You live in the UK for 9 months this year, so you're a UK tax resident
- You work from Spain for 3 months (remotely or locally)
- You should pay tax in Spain for the earnings of those three months
- You should pay tax in the UK for the full year, but claim payments in Spain back against that (there's a field for this on UK tax returns).
- That means your total tax bill is the same as if you were just in the UK (this isn't necessarily always true, if you have wildly different tax rates), but there's just more paperwork.
In practice, my impression is loads of people ignore these rules (I personally know large numbers of people doing so), and just pay tax where they're tax resident (or even just where they were last tax resident), and skip the extra paperwork.
Whether you can get away with that depends on your situation, but if you're asking for tax advice on HN you're probably not an individual where it's going to bite you, as long as you pay tax correctly for the majority (i.e. if you just pay normal full tax to the UK, in this example).
This is 'what happens in practice' advice though - it's a good idea to actually talk to an accountant, and take the risks of shortcuts here seriously, especially if your situation is interesting or complicated or you're earning a lot of money. These rules can also vary significantly in other nations, so you'll need to double check them for each of the countries you're planning to visit.