Italy and France--U.S. Dual Taxation Issues: U.S. Treaty Benefits, Saving Clause, Residency Rules

Unlike other countries, the U.S. taxes the worldwide income of its residents regardless of where they reside and earn their living. In Italy and France, having a residence in the country can establish residency. Similar to the U.S., both countries have their unique 183-day tests for residency. A U.S. citizen living abroad could meet the U.S. and Italy or France residency requirements within the same tax year. For this reason, the U.S. income tax treaties with Italy and France contain tie-breaker rules to settle this issue.

Although nonresidents' passive income is generally subject to a 30 percent tax rate, the treaties with France and Italy provide exemption from or lower rates for certain types of passive income. These benefits, though, do not extend to U.S. residents by virtue of the saving clause included in U.S. income tax treaties. The saving clause preserves the right of the U.S. to tax its citizens regardless of the benefits available in these treaties. Although the agreements differ, the U.S. has totalization agreements with France and Italy to eliminate dual coverage and payments of self-employment or social security taxes. Multinational tax advisers working with taxpayers who reside or work in Italy or France as well as the U.S. need to understand the rules of taxation for these countries.

Listen as our panel of multinational tax specialists explains how the U.S., Italy, and France tax intercontinental travelers.

1. Italy and France: U.S. dual taxation issues introduction
2. Residency
   1. Italy
   2. France
3. Totalization agreements
   1. Italy
   2. France
4. Treaty benefits and caveats
5. Inheritance taxes
   1. Italy
   2. France
6. I. Tax-saving devices
   1. Foreign tax credits
   2. Foreign earned income exclusion
   3. Housing exclusion
7. Best practices

The panel will cover these and other critical issues:

• How the saving clause can supersede lower treaty tax rates
• Residency requirements for taxpayers living or working in Italy
• How the U.S. France totalization operates
• Tax-saving vehicles for multinational taxpayers including foreign tax credits

Learning Objectives

After completing this course, you will be able to:

• Identify credits available to U.S. taxpayers living and working abroad
• Determine how the totalization with France circumvents double self-employment taxation
• Decide what residency requirements are in Italy
• Ascertain how the saving clause sometimes trumps treaty benefits

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite: Three years+ business or public firm experience preparing complex tax forms and schedules, supervising other preparers or accountants. Specific knowledge and understanding of international taxation including residency determination, foreign entity classifications, application of treaty benefits, as well as GILTI, Subpart F, and the related Section 250 deductions.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).