Do you know how the income taxes for expats and other obligations works? Knowing about this subject is important, considering that it is people, generally professionals, who live outside their countries of origin. Therefore, companies need to be aware of the laws that involve these processes, including fiscal and tax issues.
Given the phenomenon of globalization, it is indisputable that expatriation becomes a frequent event in multinationals. For the expatriate, it is a great professional opportunity, capable of boosting their career.
Doubts regarding taxations are very important, as they are part of a major change in the expatriate’s life and, therefore, are the reason for tax planning, which is nothing more than a study of the internal tax law aspects of each country involved in the expatriation, as well as aspects of international tax law, such as treaties and conventions, always taking into account the type of investment and assets that the expatriate has in USA, and their source of income abroad, respecting the interests and wishes of the expatriate.
Also, although it is common for our clients to have been recommended by other professionals to dispose of all their investments and assets in USA before expatriation, we emphasize that the specific and specialized analysis of each case is essential, since such a drastic measure can be the simplest, but not necessarily the best alternative for you.
Are residential domicile and tax domicile different?
First of all, it is essential that we explain the difference between residence and tax domicile. Residence is where the individual actually lives. Tax domicile, in turn, is determined by the domestic legislation of each country. The importance of this is that the vast majority of countries, as a general rule, tax their residents one way and their non-residents another.
Thus, the first step in tax planning for expatriates is to assess the loss of tax resident status in USA and the acquisition of tax residency in the country of destination.
As for the temporary visa where there is no employment contract, the income tax declaration is only required if the migrant stays more than 183 days in USA in a 36-month interval. In this case, it must declare, in Income Tax, the income obtained on a worldwide basis, as well as rights, assets and obligations acquired anywhere in the world.
But if the matter is different like if a person start his own business in USA instead of working in a US company then he must know some important points in his mind like:
Important information about starting a business in the USA
- To register a company in USA, you must have an identification document and a passport. This permission, with this type of documentation, is valid to start a business, but not to reside there. OK?!
- You can enter the opening process via e-mail or fax, which means that you don’t necessarily need to be there.
- The opening period for a company in the US takes, on average, 10 days.
- The investment of starting a company in the USA can range from 800 dollars to infinity.
- Your Indian company does not need to have any kind of association with the new company to be opened in the US.
- However, when it comes to business address, it is necessary that the company has one, in an American state.
- There, in the US, when it comes to providing services, you can register the company in all types, if you want, and even so, the tax amount will not depend on your category, as the value is the same for all modalities of this type of market operation.