Moneyzine
Contents
/Personal Finance/Tax Treaty (Bilateral Tax Agreement)

Tax Treaty (Bilateral Tax Agreement)

Moneyzine Editor
Author: 
Moneyzine Editor
1 mins
September 25th, 2023
Advertiser Disclosure

Definition

The term tax treaty is used to describe an agreement that reduces, or eliminates, the double taxation that can occur when an individual or company resides in multiple jurisdictions. The objectives of a tax treaty include reducing double taxation, lowering the frequency of tax evasion, and encouraging trade.

Explanation

Also known as a bilateral tax agreement, a tax treaty is an arrangement that reduces or eliminates the double taxation of individual residents as well as corporations. Treaties may include profits (earnings), income (wages), inheritance, sales, royalties, capital gains, as well as value added tax. A tax treaty can be an agreement between countries, territories, states, counties or even townships.

The process of eliminating double taxation involves the exchange or sharing of taxpayer information as well as mutual assistance in the collection of taxes owed. The provisions of a tax treaty may include:

  • Enforcement and procedural frameworks for both implementation as well as dispute resolution.

  • Resident eligibility rules, benefits, exemptions, in addition to the taxes covered by the treaty.

  • Limits on the amount of tax one jurisdiction may levy against the income of an individual or business once permanent residence is established.

Related Terms

Related Content

  • What Can Help You Meet Your Budget While Shopping for Important Items?
    Budgeting while ensuring you don't compromise on quality can seem daunting. Whether filling your pantry, updating your wardrobe, or keeping up with the latest tech, smart shopping strategies are crucial for keeping your finances in check.
    April 2nd, 2024
  • How to Make a Million Dollars in 10 Years
    Truthfully, this title should actually be “How to Make a Million Dollars in 10 Years Without Going Into Debt", but that is just getting a little too winded for my liking. It’s true though!
    November 18th, 2024
  • How to Apply Maslow’s Hierarchy to Your Money This Year
    You might vaguely remember your psychology teacher talking about Maslow. He pointed at a picture of a triangle as you nodded off in the back of the school room.
    November 18th, 2024
  • How to Tackle Multiple Savings Goals
    When there’s only so much money to go around, there are often multiple savings goals competing for your money. Think of the young professional who’d like to get a more reliable car, buy a house, and save for retirement. Or consider the young family that’s saving for college, retirement, and a bigger house.
    March 22nd, 2024
  • The Countdown to Early Retirement: 10 Expenses to Eliminate
    Dreaming of waving goodbye to the daily grind five years ahead of schedule? The road to early retirement is paved with more than good intentions; it requires a meticulously crafted strategy with surprising twists. It's not solely about what you should be doing—like diligently saving a portion of your income or investing wisely—but also about what you need to stop doing.
    March 22nd, 2024

Contributors

Moneyzine Editor
The Moneyzine editorial team consists of writers and content specialists with diverse backgrounds.
Moneyzine 2024. All Rights Reserved.