Do I Pay Tax On Money Earned Aboard?

Do I Pay Tax On Money Earned Aboard? Here Is An Easy Summary

Are you asking, ‘Do I pay tax on money earned aboard?’ If yes, here is an easy summary and resources to help you keep your taxes on track.

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What Is Tax On Overseas Income?

When you’re arranging a move you need to consider the taxation regulations of your country of residence and the country of citizenship.

The key to an expat move is to ascertain which countries are more tax-friendly whenever possible and income tax income is reported worldwide.

There are four general tax groupings for countries. You’ll find that list here:

Heres the 4 taxation classes:

  • Nations residents on their worldwide income and those tax citizens. These countries tax residents.
  • Nations that tax residents on their worldwide income. This is residential or existence.
  • Nations that tax citizens on their worldwide income, but not residents.
  • Nations that tax residents on their source income, but not foreign source income.

This is a basic view of the tax system. One of the countries that taxes its citizens on foreign income is the US.

As long as you maintain a U.S. Card or passport, the IRS wants its cut of capital gains and your profits.


Some countries that tax residents on their worldwide income include North Korea, Libya, Eritrea and the Philippines. The tax systems of those nations aren’t well developed and information is limited.

Whereas, the US taxes all U.S. Persons on their worldwide income.

A U.S. Person is a citizen, green card holder, and residents.

If you be eligible for the Foreign Earned Income Exclusion, and are living and working outside the US, you can earn around $102,100 in salary free from Federal tax.

You’ll pay US taxation on capital gains, dividends, rents, royalties, along with passive earnings regardless of where you reside.

Category two includes nations which tax residents on their worldwide income.

Some have more complicated tests to determine who’s and who isn’t a tax resident.

For instance, Colombia uses your presence within the nation and the next:

Staying continuously or non continuously in Colombian jurisdiction for more than 183 calendar days during per 365 day period, 2.50% or more of the income comes from Colombian sources,  3.50% or more of the assets are held in Colombian Territory, 4.50% or more of the assets are managed from Colombian Territory.

The UK also uses a residency test before calculating any income tax.

The best-known category two residential taxation nations are Australia, Austria, Brazil, China, Colombia, Japan along with Mexico.

The residency taxation system is the most typical and a comprehensive list can be found here.

Category 3, nations that tax foreign citizens otherwise than city residents, technically comprises of Saudi Arabia, Cuba and Philippines.

Finally, I hope that this helps you with the question do I pay tax on money earned aboard.

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