The purpose of tax treaties between countries is to mitigate the double taxation effects. These treaties cover VAT (value added taxes), inheritance taxes, income taxes, etc. Tax treaties can be bilateral (between two countries) or multilateral (between several countries, like those between EU countries).
A tax treaty is concluded in order to reduce taxes of one country for foreigners who come from the other country, and prevent double taxation. Treaty provisions can vary, and there are different tax treaties, depending on the goals of the treaty.
In most cases, a treaty reduces taxes withheld from dividends, royalties and interest paid by one country’s resident to the other country’s residents. Tax treaties define who is eligible for benefits, and what taxes can be covered.
Countries conclude such treaties in order to encourage cross border trade, prevent double taxation, reduce/eliminate tax evasion, and increase certainty for both tax authorities and taxpayers.
U.S. Tax Treaties
The countries that have tax treaties with the United States are listed below.
• Australia
• Austria
• Armenia
• Azerbaijan
• Barbados
• Bangladesh
• Belgium
• Belarus
• Bulgaria
• China
• Czech Republic
• Canada
• Cyprus
• Denmark
• Estonia
• Egypt
• France
• Finland
• Germany
• Georgia
• Greece
• Hungary
• India
• Iceland
• Ireland
• Indonesia
• Italy
• Israel
• Japan
• Jamaica
• Korea
• Kazakhstan
• Kyrgyzstan
• Lithuania
• Latvia
• Luxembourg
• Mexico
• Malta
• Morocco
• Moldova
• New Zealand
• Norway
• Netherlands
• Philippines
• Pakistan
• Portugal
• Poland
• Russia
• Romania
• Slovak Republic
• South Africa
• Slovenia
• Spain
• Sweden
• Sri Lanka
• Switzerland
• Tajikistan
• Trinidad
• Thailand
• Turkey
• Tunisia
• Turkmenistan
• Ukraine
• Uzbekistan
• United Kingdom
• Venezuela
Visit the IRS website to read the treaties.