U.S.-European Union Dual Taxation Issues: Residency Determinations, Treaty Benefits, Digital Taxation

The U.S. has income tax treaties with most European countries. These treaties help avoid double or excessive taxation for taxpayers with ties to both the U.S. and another country. No two treaties are the same, although most have common provisions. Lower withholding rates for certain nonresident income, definitions of permanent establishment (PE), limitation of benefit clauses to prevent treaty-shopping, and even tie-breaker rules are included in most treaties.

Applying U.S. income tax treaty provisions is complicated. The existence of a PE can permit a source country to tax a nonresident. However, most treaties were written before the advent of digital commerce. Lacking a concrete definition of PE, nonresidents are often subject to the U.S.' interpretation of what constitutes a PE.

Dual citizenship offers many rewards. The ability to travel freely, purchase property, and live and work in two countries is appealing. Some European countries offer residency by investment initiatives. One of the most successful programs has been Portugal's golden visa program (Autorizacao de Residencia para Atividade de Investimento or ARI). Portugal generated 7,500 new residents and 5.2 billion dollars as of March 2019. With substantially more taxpayers residing in the U.S. and Europe, foreign tax advisers need to know the tax benefits and concerns of this duality.

Listen as our panel of international tax experts explain U.S. income tax treaties with specific countries in Europe, how to avoid or lower double taxation, and the latest rules concerning taxation of digital commerce in the U.S. and Europe.

1. U.S.-EU dual taxation: introduction
2. Residency
3. Permanent establishment
   1. Defined
   2. Digital commerce
4. Europe's relocation incentives
5. An analysis of taxation and U.S. income tax treaties
   1. France
   2. Spain
   3. United Kingdom
   4. Other countries
6. Dual taxation relief
   1. Treaty benefits
   2. Foreign tax credits
   3. Foreign earned income exclusion
   4. Other relief
7. Other considerations

The panel will review these and other critical issues:

• How is domicile established in the U.S. and France?
• What treaty provisions are available to mitigate taxation for dual taxpayers?
• How is residency determined in certain countries in Europe?
• How has the digital economy affected the sourcing determinations in the U.S. and EU?
• What steps can be taken to lessen or avoid dual taxation?

Learning Objectives

After completing this course, you will be able to:

• Determine how taxpayers benefit from the U.S.-France income tax treaty
• Decide when a taxpayer is considered a resident of specific countries in the EU
• Ascertain specific strategies to lower or avoid double taxation
• Identify treaty benefits available to mitigate tax

• 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).