PREP Podcaster - ”Success Favours The PREPared Mind”

Unveiling the Secrets of Homeless Income: How Multinationals Exploit Global Tax Treaties

This is an AI generated podcast of a 2014 paper written by Professor Bret Wells and Cym Lowell titled: “Income Tax Treaty Policy in the 21st Century: Residence vs. Source”

Why this is important:

The Trump administration recently proposed (as part of the “OBBB”) a provision that would impose tax penalties on residents of countries that had DSTs (“Digital Services Taxes”). The U.S. objection to DSTs is largely based on the provisions in tax treaties which give the “source country” (where the profits are generated) the right to tax those profits only if the corporation as a PE (“Permanent Establishment”) in that country. Of course, Google, Microsoft, et al do NOT have a “permanent establishment” in Canada, UK, India, etc. As a result many countries (because they cannot tax the income of U.S. multitionals) have enacted DSTs which are a tax NOT income but rather on revenue.

Yes, the standard tax treaties (which are 100 years old) deny the source country taxing rights (absent a PE). But, why is this? Does it make sense in 2025 to deny the source country taxing rights over income?

I came across a FANTASTIC article written by Professor Brett Wells and Cym Lowell which provides some historical perspective on this issue:

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2380241

I then ran it through AI and here is the summary. The AI description is:

Income Tax Treaty Policy: Residence vs. Source

1 source

The provided text explores the historical evolution of international income tax treaty policy, focusing on the shift from source-based taxation to residence-based taxation following World War I. It highlights how the League of Nations' model, which favored residence countries (often capital-exporting nations) and introduced the concept of Permanent Establishment (PE), largely superseded an earlier International Chamber of Commerce (ICC) proposal for profit-split methodologies. The text argues that this historical policy choice, coupled with the later rise of "interim holding companies," inadvertently led to the creation of "homeless income"—profits that escape taxation in both source and residence countries. Ultimately, it suggests that a re-examination of these foundational principles is necessary to address current global tensions surrounding multinational corporations' tax planning strategies and to foster more balanced and equitable international tax policies for the 21st century.

 

 

 

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AI description of PODBEAN podcast:

 

"In this episode, we explore the intriguing world of international tax treaties and uncover why some of the world's largest multinational corporations seem to pay surprisingly low tax rates. Delve into the history and evolution of these tax agreements, tracing back to post-World War I Europe, and understand the critical decisions that continue to shape modern global tax systems. Learn about the concept of "homeless income"—profits not taxed effectively in any country—and the controversial mechanisms allowing companies to shift profits to low or no-tax jurisdictions.

We reveal the stark contradictions and outdated policies that have left governments and corporations dissatisfied with the status quo. Discover how historical economic theories and deliberate policy choices have led to today's contentious base erosion and profit shifting (BEPS), a practice under scrutiny by international bodies like the OECD.

Join us as we discuss the changing economic power dynamics between traditional "imperial" countries and emerging economic giants. Explore the future challenges in international tax reform and consider the complex interplay between national interests, corporate strategies, and global economic fairness. This deep dive provides valuable insights into the mechanics and potential reform of a tax system nearly a century in the making."

"Citizenship and Taxation: The Twin Destinies Shaping Global Mobility"

June 12, 2025 - Participant includes:

John Richardson - @ExpatriationLaw

 

On June 12, 2025 SEAT members Laura Snyder and John Richardson separately gave presentations at the Migration Conference held at the University of Greenwich in London, UK.

A complete description may be found on the SEAT site here.

A brief outline of John's presentation (and the slides used) may be found in the blog post here.

This podcast is a recording of John's presentation.

AI description:

 

"Join lawyer John Richardson from Toronto, Canada, as he delves into a vital yet overlooked issue impacting global mobility: taxation as destiny. This episode explores the rarely discussed concept of exit taxes, which pose significant barriers to emigration for people seeking to move from their country of citizenship. John sheds light on how these taxes affect individuals, especially middle-class citizens, preventing them from pursuing new opportunities abroad.

Through his experiences from attending various international conferences, John highlights the importance of establishing multilateral treaties to address this growing concern. He argues for the rights of middle-class individuals to move freely without the fear of punitive taxes on their hard-earned pensions and assets. With examples from history, John draws attention to the urgent need for international cooperation in mitigating these financial barriers, advocating for fair and just treatment of migrating populations worldwide."

The Immigration Dilemma: A Tale of Two Stories

June 12, 2025 - Participant includes:

Dr. Laura Snyder - @TAPInternation

On June 12, 2025 SEAT members Laura Snyder and John Richardson separately gave presentations at the Migration Conference held at the University of Greenwich in London, UK.

A complete description may be found on the SEAT site here.

This podcast is a recording of Laura’s presentation.

An AI description of her podcast is:

 

"In this episode, Laura Snyder delves into the intricacies of immigration, exploring two compelling stories of migration to and from the United States. The first tale takes us back to the 19th century, unraveling the challenges faced by immigrants arriving in America, particularly the risk of conscription by foreign powers like Britain during the Napoleonic Wars. Snyder highlights the enduring issue of dual nationality and the resulting impact on individuals with ties to their homeland.

The narrative progresses to the 20th century and beyond, addressing the modern-day struggle of U.S. citizens living abroad who face the burden of being taxed on their worldwide income. Despite living outside the U.S., Americans grapple with a complex tax system, leading many to contemplate renouncing their citizenship. Snyder reflects on the parallels between historical conscription and current taxation policies, emphasizing the need for evolving international perceptions of citizenship and allegiance.

Through historical insights and contemporary analysis, this episode challenges listeners to reconsider the implications of perpetual allegiance and the responsibilities of both host and origin countries in safeguarding the rights and freedoms of immigrants."

 

Navigating FATCA: The Accidental American's Struggle with Captain Ronald Aries

May 30, 2025 - Participants include:

 

Ronald Aries - @Ronald77171496

 

John Richardson - @ExpatriationLaw

 

Introduction:

 

Someday FATCA historians will seek to understand the impact of FATCA and U.S. citizenship taxation on individuals born in the USA, with no memory of having lived in the USA, who moved from the USA at a very early age and grew up as residents and citizens of other countries. They did NOT think of themselves as Americans. Their lives were fine until the day arrived where they had a rude awakening. They were accused of being a United Citizen.  The accusation came from their financial institution in their country of residence. Under FATCA IGA mandated threats to cut off access to their financial accounts these individuals were faced with few options. The message was clear: they were U.S. tax evaders. It was time to "come clean" and provide the banks with U.S. Social Security Numbers they never had. Either that or produce a U.S. Certificate of Loss of Nationality ("CLN") which they never knew existed. But, absent compliance, they were threatened with the possibility of losing access to their bank accounts. Under these threats various people had various responses. Some officially renounced U.S. citizenship (a citizenship they didn't even know they had). Others acquired U.S. Social Security Numbers and provided them to the banks who graciously allowed them continue their banking access. Some simply hid under a rock and ignored the increasingly loud and angry threats from the banks and from their Americans overlords. But, a select few decided that they:

- would not comply

- would not renounce

- would not run

- would not hide!

Instead they decided to fight!!

Ronald Aries was a retired KLM Captain and a proud Dutch citizen. He decided to fight. His adventures with FATCA covered many of the issues raised by FATCA.

This is the fourth of my podcasts with Ronald Aries. In this podcast we review his background and discuss his latest challenge to the FATCA IGAs. This particular challenged, framed by his courageous lawyer Ellen Timmer was based on the novel theory that:

Even a U.S. citizen (if he really is one) has the general rights to privacy afforded by the general European GDPR ("General Data Privacy Regulation").  The General Data Protection Regulation (GDPR) is a comprehensive data privacy law enacted by the European Union (EU) that came into effect on May 25, 2018. 

The hearing took place on May 19, 2025. The decision is expected within six weeks. Ronald and I will do a follow up podcast to discuss the actual decision when it comes down.

Here is how AI summarized our podcast:

"Join John Richardson as he engages in an enlightening conversation with Captain Ronald Aries, the renowned KLM pilot known for his fight against FATCA's impact on accidental Americans. In this episode, discover Ronald's unique journey as an accidental American born in the United States but raised in Holland, and how it led him to challenge the controversial tax regulations imposed by the U.S.

Explore the complexities and legal battles surrounding FATCA, as Ronald shares personal anecdotes and insights from his recent court case, shedding light on the profound implications of this legislation for individuals unaware of their American citizenship status. Learn about the ongoing tensions between privacy rights, data protection, and international laws, as countries in Europe grapple with the challenge of FATCA compliance.

Experience the human side of this legal saga, as Ronald passionately discusses the personal toll and emotional weight of being entangled in a global financial net, fighting for recognition and fairness. This episode offers a poignant look into the world of accidental Americans, their struggles, and the broader implications of U.S. citizenship-based taxation policies on global individuals."

The Proposed Remittance Tax: Who's In? Who's Out?

May 18, 2025 - Participants include:

Dr. Laura Snyder - @TAPInternation

John Richardson - @ExpatriationLaw

 

Introduction:

 

Part of the "Big Beautiful Bill" introduced by the Trump administration includes a 5% tax on "remittance transfers". Contrary to the publicity, this provision is NOT restricted to "illegal aliens" and is NOT restricted to remittances sent outside the United States.

It is easy to imagine that this could have a "mission creep" that would eventually result in complete capital controls in the United States.

The following links will be helpful in understanding:

- what the proposal means

- who is affected by it

- compliance concerns

- evolution

https://waysandmeans.house.gov/wp-content/uploads/2025/05/The-One-Big-Beautiful-Bill-Section-by-Section.pdf


https://www.whitehouse.gov/articles/2025/05/one-big-beautiful-bill-is-a-once-in-a-generation-chance/


https://punchbowl.news/wp-content/uploads/SMITMO_017_xml.pdf

https://www.law.cornell.edu/uscode/text/15/1693o-1

https://www.law.cornell.edu/uscode/text/26/subtitle-D/chapter-36

AI Description:

"Join John Richardson from Toronto, Canada, as he delves deep into the implications of the recently introduced but contested "big, beautiful bill" alongside Dr. Laura Snyder, President of SEAT. This episode focuses on "SEC. 112105. EXCISE TAX ON REMITTANCE TRANSFERS" of the "Big Beautiful Bill"  concerning the new excise tax on remittance transfers.

Throughout the conversation, John and Laura unpack the details and potential consequences of this legislation. They explore its broader impacts, notably on legal immigrants, green card holders, and even U.S. citizens residing abroad. The discussion highlights concerns about the tax's possible contradictions with equal protection rights under U.S. law and the logistical challenges individuals may face when trying to secure tax credits.

This episode provides insights into how the remittance tax, under the guise of targeting illegal immigrants, effectively broadens its reach, complicating financial transactions for many, and raising questions around citizenship taxation policies. Tune in to understand better these unfolding legislative changes and their far-reaching effects."

Podcast 2: The First American Pope and the FBAR Predicament

May 16, 2025 - Participants include:

 

Virginia La Torre Jeker - @VLJeker

 

John Richardson - @Expatriationlaw

 

On May 4, 2025 Virginia and I did a podcast about the possibility of a U.S. citizen being appointed Pope. You can access that first podcast here:

https://prep.podbean.com/e/a-us-citizen-as-pope-exploring-tax-implications-and-controversies/

 

This podcast on May 16, 2025 continues our discussion. Of course, a U.S. citizen is now Pope.

Here is our discussion.

 

AI Generated:

 

"Join host John Richardson from Toronto and special guest Virginia La Torre Jeker, a U.S. tax lawyer based in Dubai, as they delve into the unique challenges faced by Pope Leo, the first American pope. In this engaging discussion, they explore the implications of U.S. tax laws on the Pope's situation, particularly focusing on the Foreign Bank Account Report (FBAR) obligations that accompany his American citizenship.

As they sift through the complexities of U.S. tax reporting, John and Virginia evaluate the broader impacts these regulations have on Americans living abroad, drawing attention to the broader scope and potential need for reform. They also spotlight the recent Wall Street Journal article by Laura Saunders, which adds depth to the debate on whether or not the Pope is required to file U.S. taxes given his vow of poverty.

This riveting episode not only addresses the pope's tax conundrum but also questions the ethics and practicality of the current citizenship-based tax regime, prompting listeners to rethink the rules of the game."

Toward An Argument That US Citizenship Taxation Violates International Law

May 4, 2025 - An AI conversion of a written blog post into a podcast ...

 

Here is the original blog post from April of 2025:

https://citizenshipsolutions.ca/2025/04/20/toward-an-argument-that-us-citizenship-taxation-violates-international-law/

 

 

AI - Generated podcast:

 

This podcast episode delves into the complexities of FATCA litigation and U.S. citizenship taxation, exploring why legal challenges to FATCA often fail. The discussion emphasizes the distinction between addressing the symptoms of FATCA, such as privacy breaches and discrimination, and tackling its root cause: U.S. citizenship-based taxation.

The episode scrutinizes the implications of the U.S. imposing tax obligations on citizens residing abroad, questioning whether this practice aligns with international law principles. It argues that U.S. citizenship taxation expands the U.S. tax base globally, often conflicting with the tax sovereignty of other nations and potentially violating customary international law (CIL).

Listeners are encouraged to consider whether U.S. citizenship taxation, which bases tax residency on citizenship rather than physical or economic ties, is an outdated practice incompatible with modern international norms. The podcast aims to spark a broader discussion on the need for tax reform, particularly for Americans living overseas.

A U.S. Citizen as Pope? Exploring Tax Implications and Controversies

May 4, 2025 - Participants include:

 

Virginia La Torre Jeker - @VLJeker

 

John Richardson - @ExpatriationLaw

 

Introduction:

The idea for this podcast came from a New York Times article discussing the possibility of a U.S. citizen becoming the next Pope. It is likely that the Pope would have the authority - as per the FBAR Regulation:

"to control the disposition of money, funds or other assets held in a financial account by direct communication (whether in writing or otherwise) to the person with whom the financial account is maintained."

Could the U.S. Treasury impose FBAR penalties on a U.S. citizen Pope for failing to include the Vatican's accounts on an FBAR? The answer to this question was the topic of our discussion today.

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AI Description:

 

In this intriguing episode, John Richardson from Toronto engages in a thought-provoking discussion with Virginia La Torre Jeker, a renowned U.S. tax lawyer based in Dubai, about the potential tax implications if a U.S. citizen were to become the Pope. The conversation delves into the complexity of U.S. tax laws, particularly FBAR (Foreign Bank Account Reporting), and how they could apply to a high-profile individual like the Pope, overseeing vast Vatican finances.

The dialogue also explores the broader implications for U.S. citizens in positions of international power, the intersection of religious institutions and U.S. tax obligations, and the potential hurdles a U.S. citizen might face in such globally influential roles. Topical questions about financial transparency, the Vatican's compliance under FATCA, and the hypothetical responsibilities of the Pope regarding U.S. taxation and reporting rules are also addressed, shedding light on the challenges of citizenship, taxation, and global politics.

Space 26 - April 14, 2025 - The Evolution of @CitizenshipTax - From 1979 - 2025

April 14, 2025 - Participants include:

 

Dr. Suzanne de Treville - @SdeTreville

Tim Smyth - @TpSmyth01

Brad - @InvertedFragility

Brent Vanderbrook - @Vanderbrook

Jacob - @Giorniofr

John Richardson - @ExpatriationLaw

 

Note: This podcast is a recording of an "X Spaces" discussion. The actual audio does not start until approximately the two minute mark.

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A truly fascinating discussion primarily by Brent Vanderbrook about the "ideology" of U.S. citizenship taxation.

How does one engage in a discussion with people inside the USA (particularly US Treasury) about changing citizenship taxation?

 

Space 25 - April 12, 2025: The 1980 Carter Report On Citizenship Taxation: Nothing Has Changed In 45 Years

April 12, 2025 - Participants include:

 

Dr. Suzanne de Treville - @SdeTreville

Tim Smyth - @TpSmyth01

Brad - @InvertedFragility

Brent Vanderbrook - @Vanderbrook

John Richardson - @ExpatriationLaw

 

Note: This podcast is a recording of an "X Spaces" discussion. The actual audio does not start until approximately the two minute mark.

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Introduction …

In 1980 President Jimmy Carter filed a report on the topic of "U.S. Law Affecting Americans Living and Working Abroad".

The Carter report was …

“A legislative effort by Senator George McGovern required the President to conduct a thorough study of laws governing U.S. citizens abroad. This report by President Jimmy Carter was the first under that law - a painstaking review of the many legal provisions affecting U.S. citizens residing abroad. Issues include loss of citizenship by children born abroad, income tax, social security, veterans benefits and many other matters - and very little has changed since this report was written, so this is still a valuable legal guide for any American taking up foreign employment or residence.”

The book is available here.

It is a fascinating report in terms of its content. In addition, to the content it reveals the impressive work done by "American Citizens Abroad" in its formative years. Significantly, many of the problems that exist today were identified in 1980. Very little has changed for the better.

 

Significantly the report is based on a world BEFORE:

• FBAR enforcement AKA The Obama/Biden “FBAR Fundraiser”

• the creation of the PFIC rules in 1986 (Reagan tax reform)

• Obama/Biden FATCA in 2010

• the Clinton Treasury Foreign Trust rules of 1996

• the Clinton Entity classification regulations of 1996

• the Obama OVDI/OVDP programs beginning in 2009

• Trump administration Transition Tax/GILTI rules of 2017

Note that EVERY ONE of these things is the result of U.S. citizenship taxation.

The ONLY solution is a complete separation/severance of citizenship from tax residency. Hate to say it, but there is NO OTHER option.

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On April 12, 2025 Dr. Suzanne de Treville led a discussion about the Carter report. Her discussion specifically referenced a presentation and spreadsheet which are at the following two links:

https://docs.google.com/presentation/d/1_fN0iCzcBhftbiemFYEm9B7dQsCQp9O8bV7D0a70JV8/edit?usp=sharing

https://docs.google.com/spreadsheets/d/1tCwz7RM2Uc1RV8o0rY7BBprVv3_357TSAJ-D4-eZicM/edit?usp=sharing

 

In addition, Dr. de Treville referenced the earlier work of AARO, which is documented in the following post.

 

https://citizenshipsolutions.ca/2024/01/21/the-unknown-ambassadors-a-saga-of-citizenship-phyllis-michaux/