Services for Individuals
Personal Income Tax and Withholding Taxes
– Cross Border Income and its tax challenges
Building wealth and protecting assets require a clear plan that evaluates your current financial situation and predicts what your future finances might look like, based on the financial decisions you make.
Tax planning is a necessary part of financial planning. If you do not actively plan how to deal with your tax burden, you risk losing income or gains you have earned. Making it difficult, if not impossible, to build wealth or reap the benefits of your accumulated savings. Tax planning specifically refers to analyzing and creating actionable steps for your financial future in light of your tax burden. A thorough tax plan reduces current and future tax liability, allowing you to meet your financial goals.
Naturally, you will have to pay your fair share of taxes. But in many cross-border transactions, your income is subject to complex multi-national tax rules and principles. Taxes can be imposed by various countries simultaneously, leading to double or over-taxation. In the source country, where you have built your wealth or from where you derive income, you may be subject to personal income tax or withholding taxes. In addition, you will be subject to personal income taxes in the country where you reside. Common misconceptions are: “you can only be taxed in one country” or “there is a tax treaty in place”. Sadly, there are no general or international rules to deal with the scenario of double and over taxation. Where tax treaties can be helpful in alleviating some of this over-taxation, it is a misconception that a tax treaty is a ‘solve all’. Tax treaties are very rudimentary and the wording that is used therein can be ambiguous. To arrive at the most optimal outcome, we must simultaneously understand and apply:
1. The tax rules of the source country;
2. The tax rules of the residence country;
3. The provisions of the tax treaty between both countries;
4. Any other international/multilateral arrangements that may be applicable.
Our holistic methodology utilizes this approach to attain the best possible outcome for you.
Our method to tax planning is based on three crucial components: 1. tax optimization; 2. tax minimization; and 3. tax utilization.
Tax Optimization
Part of making tax planning decisions is optimization, which is the process of tax-efficient choices that lead to the best outcome for your current and future tax liability. You can think of tax optimization as one of those choose-your-own-adventure books. You have many choices to make about your financial future. Each choice has a different outcome, some better than others. Tax optimization for instance can consist of the acceleration or deferral of income, or of the reclassification of income (which can lead to a better tax outcome).
Tax Minimization
The second piece of your tax planning consists of the minimization of your overall tax burden. This is achieved through the realization of appropriate tax planning and the mitigation of tax risks, all within the boundaries of the various tax laws. We apply tailor-made and advice-driven strategies, implement them, and deliver the resulting tax savings to you through filings or tax rulings. But realizing tax benefits in one country is not enough in a cross-border setting. Since tax minimization only provides benefits when the tax rules in both pertinent countries are simultaneously met, our holistic approach is crucial in obtaining results.
Tax Utilization
Utilization is the third prong of our holistic tax planning approach. A tax credit is a dollar-for-dollar reduction of the income tax that you owe. In cross-border transactions, taxes paid in one country can, within certain very strict parameters, be utilized in the other country as a tax credit. These credits have many rules regarding when, in what order, and how much of the credits can be used (or carried forward or backward). If the taxes paid in one country cannot be utilized in the other country, effectively, double taxation arises. That is why utilization is an integral component of our approach to tax planning.
Specialty Services
Pre-Migration Planning
A country’s tax system is designed for people who were born, work, retire and die in that country and are taxable from birth to death. Clients who are moving in and out of a country are often collateral damage to such rules. We believe that migration is one of the most important tax events in a person’s life. As a result of your migration, significant tax exposures can arise for you in both countries. But at the same time, substantial benefits can be attained with the right planning. We have some great ideas we would like to share with you. Learn More
Portugal
A particular focus of our attention is clients moving to Portugal. The Portuguese tax system applies a flat 10% tax rate under the NHR regime, but this regime does not encompass capital gains (which are taxable at 28%). The interaction of the Portuguese tax system with foreign tax systems and its rudimentary nature allow for some expensive pitfalls and interesting opportunities. We have designed particular tax planning ideas for people like you who are moving to Portugal, and also for when your NHR regime expires. Learn More
International Pension Planning
International pension planning is one of the cross-border areas our firm specializes in. You have worked and saved all your life for your retirement, but in a cross-border situation you may sometimes lose up to 50% of your pension funds, and in certain scenarios, even more than 50% can be lost. We can optimize your tax position with respect to your international pension distributions, and also take care of the full implementation of our planning. Our results are unmatched. We can evaluate your pension situation at no cost to you. Learn More
Inherited IRA
The USA is one of the few countries where pension funds (as a capital account) can be transferred to beneficiaries upon death. Where foreign tax systems do not have this transfer feature, no local rules of guidance exists on such Inherited IRA. This absence often results in significant tax costs for the beneficiaries. Our firm is specialized in international tax solutions for Inherited IRAs with a very impressive track record of results. If you are the beneficiary of an Inherited IRA you should reach out to us. Learn More
International Tax Filing Obligations
Cross-border transactions are often subject to very strict reporting and filing requirements. The entitlements that you have (to lower withholding or income taxes) may be lost if you fail to file the right forms. Not filing the right forms can also trigger severe penalties. We can assist you with support, outlining which forms you need to file for a particular cross-border transaction. Our network partners can file these forms for you when desired. Learn More
International Alimony
A divorce can be a painful emotional experience but once it is over, you can emerge and focus on living your life. Sometimes, that coincides with the decision to move ‘back home’. Cross-border alimony payments can be complex and may be subject to high local income taxes. Our firm has structured many cross-border alimony entitlements, thereby achieving significant tax savings for the recipient. We can do the same for you. Learn More
I met Mark in 2019 via a Facebook forum for Dutch people living in America. Since I was planning to retire and move back to the Netherlands, I was faced with a lot of international questions that I even couldn’t begin to find the answers to. Mark helped me with all the tax aspects that I was facing and also secured a tax ruling from the Dutch tax authorities, providing me with significant tax benefits. I am very happy to have found Mark and definitely recommend him.
Mark has been a valuable contributor for ExpaCity, an expert-based information
Mark has assisted me with my separation/divorce and was able to get a great outcome for me. I then further engaged him to provide tax planning advice for my alimony payments, my retirement funds, and my subsequent migration to the Netherlands. Mark has saved me a lot of money and I can highly recommend him. His approach to my case was very strategic, and that was a big contribution to the outcome. He exceeded my expectations.
I have met mark through a friend of mine who was in a similar situation as me. I have been looking all over the internet trying to find a tax lawyer that understands both the Dutch and the US tax system. I have been send from left to right and no one could help me until I found Mark.
Right from the start, he understood my situation, I inherited an IRA and had to deal with the Fund holder in the USA as well as the “Belastingdienst” in the Netherlands. Mark’s knowledge and network was outstanding, he was always open for discussions and helped me guide through the whole process which took over a year.
It was a pleasure working with Mark. He was able to secure the biggest Tax benefit possible for me without him I would have lost half of my inheritance. I highly recommend his services his knowledge and professionalism are excellent.
For months I searched unsuccessfully for someone with cross-border knowledge to help me navigate the financial and tax impacts of relocating from the United States to Portugal. I knew that there were many areas where I “didn’t know what I didn’t know”, and that ignorance could prove costly. I am so grateful that I found Mark. He has the knowledge, the ability to communicate complex information in clear terms, and provides extremely useful advice. I intend to continue working with him and recommend him in the highest terms.
I have been working with Mark for over 15 years, dating back to our time as partners of the advisory group of a global accounting firm. The complexities surrounding the tax systems of the U.S. and EU-member countries make it imperative to work collaboratively amongst both U.S. and EU tax advisors in order to ensure that multinational clients optimize their tax standing in their countries of residence and in the countries where they conduct their business operations. Over the years, Mark has become our go-to colleague when advising U.S. and European clients when dealing with cross-border tax matters (e.g., pre-immigration planning, business restructurings, asset sales, wealth and succession planning, expatriation, etc.) given his knowledge base, collaborative nature, and dedication to helping clients find solutions that work best for their case.
I have worked with Mark V. for many years at Big 4 accounting firms and midsize accounting firms. I found him to be an excellent professional and thoughtful in his tax advice. We have worked on several mutual clients that have resulted in positive outcomes for our clients.