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The Tax Treaty Saving Clause: How it works to export US worldwide taxation offshore to other countries

The Tax Treaty Saving Clause: How it works to export US worldwide taxation offshore to other countries

January 30, 2021

January 13, 2019 - Participants Include:

 

John Richardson - @Expatriationlaw

 

Tim Smyth - @Tpsmyth01

 

My last podcast featured a discussion with David Lesperance where we discussed how tax treaties impact the global mobility decision. That podcast included some discussion about the "saving clause".

 

This is an excerpt from a 2019 podcast which features an interesting discussion of the standard tax treaty "saving clause". This podcast was extracted from  a longer discussion about  Representative Holding's 2018 Tax Fairness For Americans Abroad act.

The "saving clause" is a standard feature of U.S. tax treaties which denies US citizen individuals the benefit of U.S. tax treaties except in very limited and specific circumstances. Notably, the "saving clause" prevents  US citizens from using tax treaties to sever tax residency with the United States. Green Card holders ARE (although it may trigger the S. 877A Expatriation Tax) use the tax treaty tie break  provisions to sever tax residency with the United States.

Interestingly: US citizenship-based taxation could be ended by simply either:

1. Eliminating the saving clause from the Standard US tax treaty; and/or

2. Including some kind of "citizenship-based  tie breaker" that could be used by dual citizens.

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To better understand the saving clause see the following three blog posts ...
 
Why U.S. citizens cannot use a tax treaty tie break to sever tax residency:
 
 
A bit of commentary on this issue - particularly the saving clause - in relation to the 2016 Model Tax Treaty:
 
 
Why Green Card holders can use a tax treaty tie break to sever tax residency (see the very last part) - but note that NOT all treaties are the same with respect to Green Card Holders (compare for example the treaties that the US has with Canada and the UK).
 
 
Mobility Consultant David Lesperance - How tax treaties impact the global mobility decision

Mobility Consultant David Lesperance - How tax treaties impact the global mobility decision

January 29, 2021

January 17, 2021 - Participants include:

 

John Richardson

 

David Lesperance

 

In the world of global mobility, there is great emphasis immigration and emmigration. There are many reasons why people seek second citizenships or residences. That said, every change in mobility may (or may not) create a change in tax residence. Changes in tax residency often have profound changes on wealth and opportunities. All countries have domestic tax rules. But, often these tax rules are modified by bilateral tax treaties between counties. Tax treaties impact tax residency, the amount of tax paid, information exchange and gradually more and more enforcement. In this episode, David Lesperance and John Richardson various ways these tax treaties can impact lives (including the future of the "Revenue Rule").

 

(See also my next podcast which focuses specifically on the saving clause of the standard US tax treaty.)

 

 

 

 

Members of @SEATNOW_org: Understanding US @Citizenshiptax and why ending #FATCA will have no effect on US tax policies

Members of @SEATNOW_org: Understanding US @Citizenshiptax and why ending #FATCA will have no effect on US tax policies

January 20, 2021

January 20, 2021 - Participants Include:

 

John Richardson - @Expatriationlaw

Dr. Karen Alpert - @FixTheTaxTreaty

Dr. Laura Snyder - @TAPInternation

Suzanne Herman - @SuzanneHerman1

Keith Redmond - @Keith__Redmond

The core mission of SEAT is to "Stop Extraterritorial American Taxation". 

Extraterritorial American taxation is system that imposes worldwide taxation, on the non-US income of people who live outside the United States in other countries. US taxation of nonresidents is the reason for FATCA.

But:

1. Ending FATCA will NOT "Stop Extraterritorial American Taxation"; but

2. Ending "Extraterritorial American Taxation" will end the rationale for FATCA.

 

This podcast includes a discussion of (1) what Extraterritorial Americans taxation is and how it impacts people who live in other countries.

The message: individuals impacted by "Extraterritorial American Taxation" must understand that the "original sin" is "Extraterritorial American Taxation". Those impacted by these unjust and immoral U.S. tax policies must understand that this is a problem that is bigger than one individual. Things that do not affect you today could affect you tomorrow. Extraterritorial American Taxation must end.

 

"If we don't hang together, we will hang separately!"

 

Mobility Consultant David Lesperance: Canada as a destination of choice (some even think it’s a tax haven)

Mobility Consultant David Lesperance: Canada as a destination of choice (some even think it’s a tax haven)

January 17, 2021

January 3, 2021 - Participants include:

 

John Richardson

 

David Lesperance

 

Canada is a Westminster democracy. The Canadian constitution includes a "Peace, Order and Good Government Clause". It is a stable place to live, a stable place to invest and (probably) a stable place to retain your wealth.

It's no surprise that Canada continues to be a top choice for immigration.

My second podcast with David Lesperance discusses some of the additional reasons why many would be well advised to consider residence or a second residence in Canada.

 

 

 

Mobility Consultant David Lesperance: Why Second citizenship  and residence options are insurance in an unsettled  world

Mobility Consultant David Lesperance: Why Second citizenship and residence options are insurance in an unsettled world

January 11, 2021

January 3, 2021 - Participants Include:

John Richardson

David Lesperance

2020 was a difficult year for many and an unsettling year for all. It reinforced the dependencies people have on stability and predictability. It also reinforced the need for flexibility and "back up" plans.

In my first podcast of 2021 I discussed these issues  with mobility consultant David Lesperance of "Lesperance Associates".

David is the author of "Flight Of The Golden Geese" which explains the dependency that governments have on the tax revenues extracted from the few and why those few are incentivized to to seek alternative residences and citizenships. 

Retired UK Lawyer Describes How US Citizenship Taxation Impacts His Family AND The Sovereignty Of The UK And Other Countries

Retired UK Lawyer Describes How US Citizenship Taxation Impacts His Family AND The Sovereignty Of The UK And Other Countries

January 3, 2021

January 3, 2021 - Participants Include:

 

John Richardson - @ExpatriationLaw

Peter - A Retired London, UK Based Lawyer

This podcast features the experiences and perceptions of a person who is NOT and never was a U.S. citizen. But, approximately 40 years ago he married a U.S. citizen and had U.S. citizen children.

The discovery of U.S. citizenship tax rules led the family down a path of discovery where they gradually understood the principles of: U.S. citizenship, U.S. citizenship-based taxation and how the U.S. exports citizenship-based taxation to other countries.

The podcast includes a discussion of how the toxic mix of citizenship and U.S. taxation impacts individuals AND how it undermines the fiscal policies  of other nations (in this case the UK).

Of particular interest is a discussion of how the evolution of the law of U.S. citizenship (harder to lose) and U.S. taxation (infinitely more complex) has exacerbated the problem.

Ultimately, the problem is not FATCA. The problem is not citizenship. The problem is not even the rules of U.S. taxation.

The problem is that:

The United States is imposing worldwide taxation, on people who are tax residents of other countries and do NOT live in the United States.

This discussion is valuable for individuals with U.S. citizenship who are attempting to live productive and normal lives outside the United States.

The discussion is also valuable for those government policy makers who value the sovereignty of their countries and wish to end the U.S. creeping encroachment on the sovereignty of their countries. The discussion reminds me of a post that I write in 2015 describing how FATCA and U.S. tax rules burden Canada's sovereignty.

Ultimately all U.S. citizen members of the family renounced their U.S. citizenship.

Listening to this podcast explains why, for Americans abroad,  ...

"All Roads Lead To Renunciation!"

 

 

 

 

 

 

 

 

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