Tax Treaty Countries

             The United States has entered into tax treaties with a large number of countries around the world.  A tax treaty between the United States and another country makes possible a lower rate of, or maybe a total exemption from, United States income tax for the residents of the other country.  The reduced rate or exemption would be available on specific items of income received from sources in the United States. 

             Some types of income affected by tax treaties are pay for some specified personal services performed in the United States; pay for professors, teachers, and researchers that teach or research for a limited time in the United States; amounts received by a foreign student or apprentice who is in the United States for experience or study, for studies and maintenance; and salaries, wages, and pensions paid by a foreign government. 

             Pay for specified personal services performed in the United States is exempt in regard to United States income tax if the person receiving the pay is a resident of one of the specified countries, is only in the United States for a limited time period, and meets specific other criteria.  Some of the specified countries are Australia, Austria, Bangladesh, Barbados, Belgium, Canada, China, Denmark, Egypt, Finland, France, Germany, Greece, Hungary, Iceland, India, Indonesia, Ireland, Israel, Italy, Jamaica, Japan, Korea, Latvia, Mexico, Morocco, New Zealand, Norway, Pakistan, Poland, Portugal, Russia, South Africa, Spain, Sri Lanka, Sweden, Switzerland, Thailand, Turkey, United Kingdom, and Venezuela. 

             Some countries have a treaty in effect related to the amounts paid to foreign students or apprentices that are in the United States to study or gain experience.  Examples of some of the covered countries are Australia, Austria, Bangladesh, Barbados, Belgium, Canada, China, Commonwealth of Independent States, Cyprus, Czech Republic, Denmark, Egypt, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, India, Indonesia, Ireland, Israel, Italy, Jamaica, Japan, Kazakhstan, Korea, Latvia, Lithuania, Luxembourg, Mexico, Morocco, Netherlands, New Zealand, Norway, Pakistan, Philippines, Poland, Portugal, Romania, Russia, Slovak Republic, Slovenia, South Africa, Spain, Sri Lanka, Switzerland, Trinidad and Tobago, Ukraine, United Kingdom, and Venezuela.

             Some of the relatively new tax treaty agreements involve withholding tax at the source.  For Bangladesh and Sweden, the provisions are effective for those amounts paid after October 1, 2006.  The treaty for Sri Lanka related to the provisions on withholding tax at the source is effective on amounts paid after September 1, 2004.  For France, the provisions are effective for amounts paid on or after February 1, 2007.  For all other taxes for Bangladesh, Sweden, and France, the treaty is effective for periods starting on or after January 1, 2007.

             To learn more about the tax treaties between the United States and other countries, see Internal Revenue Service Publication 901, U.S. Tax Treaties, or visit the IRS website at www.irs.gov.

             If you are looking for a CPA or Accounting Firm to assist you with your income tax reporting, bookkeeping, financial planning, or general accounting needs, then you have come to the right place!  Use the CPA Search feature on this website to find a qualified professional in your area to meet your needs.