Three Tax Implications of Brexit

Brexit is expected to have a global impact on taxes. Some U.S. taxpayers and business owners are likely to have trouble in terms of withholdings, trading, and international income. The full extent of Brexit’s effects may not be felt for several more years.brexitphoto

US Tax Treaties

Eligibility in the double-tax of European countries may be impacted negatively. Derivative benefits may no longer be able to be claimed once the U.K. leaves the EU. If the U.K. opts to maintain associations with EU-involved countries, derivative benefits would still be allowed. The owner must be a member of the European Economic Area to allow the derivative benefits to still be in effect.

Negative Impact on Transfer Pricing Regulations

A higher burden of proof will be required following the completion of Brexit. Exit taxation, especially for individuals, is no longer able to be deferred. Some deferrals may still be available depending on the taxpayer’s country of origin. Provisions and bank guarantees must be in place for some deferrals to be approved for taxation purposes.

VAT Tax

The VAT tax is known as the value-added tax. It has been used across Europe since 1977. The VAT tax raises a lot of revenue. If the UK completely leaves the EU, then the UK can make changes to how VAT taxes are charged. It can also create additional taxes or change the structure completely.

Closing Thoughts

It is important that you have the proper tax professional completing your company’s tax returns. A preparer with international knowledge and experience is ideal. It is also important to review updates and changes to tax laws in order to be fully aware of current guidelines.

Image credit: Jeff Djevdet

3 Most Important Foreign Tax Filing Regulations to Follow

If you are an American taxpayer living abroad there are three important filing regulations you need to be aware of when you are filing your taxes.TaxGlobe

You Must File Your Taxes

All US taxpayers living and working abroad must file their US tax return with the IRS on the regular due date of April 15th. While the IRS does provide an automatic two-month extension for any taxpayer living and working abroad, it does not exempt you from interest. All taxes paid after April 15th will be subject to interest. Living and working abroad, while remaining a US citizen or resident alien, does not absolve you of your tax responsibility.

You Must Follow Currency Exchange Rates

When working abroad, you must file your payment of US taxes in US dollars, regardless of whether or not you receive your income in the form of foreign currency. There is no exception if you receive your income in foreign currency as a full or partial payment. All taxes must be reported in US dollars.

You Must Report Any Foreign Bank and Financial Accounts

If you possess any financial interests in a foreign country, these accounts must be reported when you file your taxes. Failure to do so will subject you to penalties and exposure to criminal liabilities concerning tax evasion and fraud.

Filing your taxes with the IRS while living abroad depends on your tax status. If you are required to file, the above are the most important tax regulations to follow.

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