Taxation in top expat destinations

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Published 7 months ago

Tax is a concern that will inevitably crop up if you're planning to live and work abroad. You're likely to pay different types of taxes depending on the country you're moving to. To avoid surprises, Expat.com gives you an insight into the tax system of the most popular expat destinations.

Belgium

Different types of taxes apply in Belgium, such as the personal income tax, which applies to the global income of residents, the non-resident tax, tax on legal persons, etc.. If you're planning to launch your startup, for example, you will also have to pay corporate tax, which applies to all resident companies in Belgium. In general, expats in Belgium have to pay personal income tax that includes benefits in kind, transport allowances, housing, transportation, as well as income received from the movable and immovable property. If you're making a six-month stay in Belgium, you will pay tax on your total income from local sources while resident income tax is based on global income. Income tax rates in Belgium range from 30% to 50%. Moreover, expats having contributed to the national security system via a local employer are eligible for a pension.

Canada

In Canada, the tax is levied at the federal, provincial, and in some cases, at the territorial level. In Quebec, federal tax ranges between 15% and 33% depending on the income threshold. Provinces, for their part, apply their own tax rates. Ontario and New Brunswick provinces charge additional taxes. In all cases, both residents and non-residents have to pay federal and provincial taxes in Canada. While residents pay tax based on their global income, non-residents are charged on their income from local sources (including those generated by a partnership unless there is an exemption agreement in this regard), wages, income from property located in Canada, dividends, and capital gains from a local business. Social security contributions are equally shared by employers and employees at a 4.95% rate.

Brazil

In Brazil, income tax applies to expats holding a permanent or temporary visa and an employment contract, and to those who have spent more than 183 days in the country with a work visa over a 12-month period. Income tax is deducted at a rate of 7.5% to 27.5%, applying to all types of income earned during the year, including expat premiums. On the other hand, housing, social security contributions, and health insurances are tax exempt. Expats are also eligible for reductions on some expenses, such as studies and medical treatments.

France

Residents in France have to pay income tax based on their overall income. Note that you're considered as a tax resident when France remains your country of residence, even if your family is staying in France while you're working abroad. In general, expats in France have to make a social contribution and pay income tax at a progressive rate of 14% to 45%, as well as housing tax applying to both tenants and owners. If you're looking to set up your business in France, you will also have to pay corporate tax while value-added tax applies to goods and services. While employers make a contribution of 40% to 45% to social security covering health, pension, family, and unemployment allowances and occupational accidents, employees contribute with 20% to 25% of their gross income.

Singapore

Singapore is world famous for its attractive tax system where expats pay tax according to the number of days spent in the country. You are considered a tax resident for the current year when you have spent more than 183 days in the country. On staying in Singapore for 183 days accumulated over a 24 month period, you will be considered a tax resident for both years. Income tax rates range from 15% to 22%. Moreover, income received from foreign sources is tax exempt unless it is the result of a partnership with a Singaporean company. In all cases, taxable income in Singapore includes wages, cash benefits, paid leaves, commissions, bonuses, and allowances. Employees also have to contribute of 6% to 9% of their salary to the Medical Savings Account (Medisave) to be eligible for healthcare.

United Arab Emirates

Offering attractive wages and living standards to expats, the United Arab Emirates are a tax haven. There is neither income tax nor corporate tax in the country. Value-added tax is also currently unexistent even though local authorities are planning to introduce it at a 5% rate as from January 2018. If you're planning to set up a business in the UAE, you will only have to pay a council tax of 10% of the office rent and 5% of the annual amount spent on your employees' accommodation. On the other hand, a 50% and 90% tax is levied on tobacco and alcohol products respectively.

United States

The US tax system is particularly complex with tax being levied at both federal and state levels. On moving there, you may be surprised by having to pay double taxes! Moreover, some regions apply additional taxes on services, schools, etc., while income tax is not levied in some States such as Florida, Nevada, and Texas. In all cases, federal taxes include social contributions and Medicare, which entitles expats to healthcare. In general, income tax in the USA ranges from 10% to 39.6%.