What do expats need to know?
Expatriates should find out whether they will be considered tax residents in their new country and what the applicable rates and tax deductions are. There are two generally used systems of taxation: territorial-based and residence-based taxation. In the territorial one, expats only pay taxes if working for companies within the countries they're living in, while residence ones have to pay taxes regardless of their location. Expats should also check whether the salary they earn there will also be taxed in their home country and what relief, if any, is provided in the double tax agreement between both countries.
Germany
All individuals considered tax residents of Germany will pay taxes on their worldwide income whether to Germany or another country. To help avoid double taxation, Germany does have tax treaties with numerous countries that determine where taxes are to be paid. If expats are earning income outside of Germany, they should review the tax treaty between Germany and that country to understand the requirements.
When it comes to the US-Germany Tax Treaty, most tax matters will be resolved based on your residency status. Is the expat a resident of the US or Germany? Where is he/she working? Where was her/his income paid? All of these factors come into play when determining where American expats in Germany will pay taxes.
For 2020 returns, the payment period will soon come to an end. The 2020 tax return needs to be submitted to the tax office by May 31, 2022, at the latest, to avoid a penalty of 0,25 per cent of the tax bill (at least 25 euros).
UK
UK expats who are no longer UK residents, along with non-UK nationals earning an income in the UK, need to file an annual tax return detailing all untaxed UK income. Non-residents usually don't have to pay either Capital Gains Tax or Inheritance Tax. According to the UK government, expats who come back to the UK after living abroad will often be classed as UK residents again.
This means they pay UK tax on their UK income and gains and any foreign income and gains—although they may not have to if their permanent home (‘domicile') remains outside the UK. British expats stayed UK residents if they were abroad for less than a full tax year (6 April to 5 April the following year). This means they usually pay UK tax on foreign income for the entire time they were away.
The deadlines for UK expats are 31st October for paper tax returns; 31st January for tax returns submitted online and 31st July for the second payment on account due for the following year (if applicable).
Brazil
If expats from Brazil are going to live abroad for a period of fewer than 12 months, they are still obliged to file their income tax. If they are going to live abroad for a period longer than 12 months, they will not need to send the income tax return, but they must fulfil another obligation, the Communication of Definitive Leaving the Country. The deadline that usually goes until the end of April (29) will go until May 31 this year.
China
While Chinese nationals are taxed on their foreign earned income, expats in China are only taxed on their income earned from a Chinese source (territorial tax). That said, if a taxpayer has been a resident in China for more than five years, they will be required to pay taxes on their worldwide income.
Chinese authorities announced in 2020 that they would be taxing their citizens' overseas income at up to 45%. According to Bloomberg, the Chinese authorities have begun tracking expats and enforcing tax filing--something they have not had to do in the past. The filing period for the annual reconciliation tax return is between 1 March and 30 June of the following year.
South Africa
As in China, the amendment requires South African tax residents abroad to pay South African tax of up to 45% of their foreign employment income which exceeds the threshold of R1. 25 million. Expats could submit their 2022 tax return for South Africa from 1 July to 31 January 2022: Provisional taxpayers may file via eFiling or SARS MobiApp.
What happens if I don't make tax returns?
Expats who fail to file their taxes on time are likely to encounter what's called a Failure to File Penalty, and its consequences can vary by country. In the US, the penalty for failing to file represents 5% of their unpaid tax liability for each month their return is late, up to 25% of their total unpaid taxes. In order to file taxes, expats have to research their options, and this depends on several factors, including their income type. From self-employment, through an employer or investments) and amount, tax filing status, age, and others.
