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Date: Thu, 22 Jan 2004 20:26:10 -0800
X-Mailer: Apple Mail (2.609)
Without confusing everyone more, you are both right: it depends.
A few issues that need to be separated:
* residence. A complex topic, a set of # of days in a year (and/or over
multiple years) is only a possible deciding factor. If you had taxes
withheld based on the assumption you were resident in one country, but
then end up or elect to be resident in another, you typically can apply
the foreign tax paid as a tax credit.
* type of income. There are separate tax treaties for income tax and
for social security tax. For income tax, you tend to get tax credits
that in the end avoid double taxation (a nicer way of saying: you'll
get the worse of the deal that the two countries offer); however, for
social security taxes, you only have to pay in one country as far as
the Swiss-US social security treaty is concerned. There are other types
of income that are treated differently.
* self-employed versus employed. If you are self-employed, the
US-Swiss social security treaty stipulates you pay social security
taxes in the country of your residence; if employed, you typically pay
social security taxes where you perform the work (this topic is
complex, have your employer figure it out; also note that the US-Swiss
social security treaty differs from e.g. the Swiss-German treaty). As
an employee, withholding taxes on your salary depend on whether you are
hired as a local or a non-resident employee (in the latter case, your
employer has to know about the rules abroad).
For practical purposes, assume you paid your taxes in one country, but
then for some reason you end up being tax resident in another country.
The double taxation treaty on income should provide for the appropriate
tax credits. However, note that the US in particular is pretty iffy
about you paying your taxes on time, so if you realize that you should
have been paying taxes in the US, then the amount you owe after
deductions and tax credits may be subject to late fees (10% +
interest). If you are are used to paying your taxes late (as is common
in Switzerland), you can also think about it positively: if you were to
pay on time, you get a 10% discount (from the elevated level).
Always consult a tax advisor if in doubt. This here is not to be
interpreted as tax advice.
Regards,
Axel Merk
Merk Investments
http://www.merkinvestments.com/
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Received on Fri Jan 23 2004 - 10:31:26 PST
