Double Taxation Relief refers to measures that prevent the same income from being taxed in more than one jurisdiction. This is especially relevant for individuals and corporations that have income in different countries.
Double taxation can occur when a taxpayer resides in one country but earns income in another. To mitigate this, countries often enter into treaties or agreements that outline how income will be taxed, allowing taxpayers to either receive credits for taxes paid to another jurisdiction or exclude certain types of income from taxation altogether.
For example, if a U.S. citizen earns income in the U.K., they may be subject to tax in both countries. Under a double taxation relief agreement, the taxpayer could claim a credit on their U.S. tax return for the taxes paid to the U.K., thereby reducing their overall tax liability.
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