My deferred compensation was paid after I moved. Which country taxes it?
Generally the country where the services the award relates to were performed, not the one you were living in when it was paid. Deferred amounts are taxed on rules keyed to when the work was done, so an instalment received years after a move can still belong, wholly or partly, to the place you have left. The payer rarely knows this, because its payroll uses your current address, so the amount is often withheld in the wrong country and has to be corrected on the returns. Keep the plan document and the award letter. They establish the period the money relates to.
Is my partnership draw the same as a salary for tax?
Not in most systems, though one of the two countries involved will often treat it as if it were. A draw against profit share is an advance on an allocation, not remuneration for services, and the difference decides which treaty article applies, whether anything should have been withheld, and where the income is sourced. Problems arise when a host country characterises the draw as employment income and taxes it accordingly while the home country continues to treat it as a share of profit. That is a characterisation conflict, and it is resolved on the documents rather than on how the money looked when it arrived.
I have signing authority over client accounts abroad. Must I report them?
Quite possibly, and this is the obligation lawyers tend to discover late. Some foreign account regimes are triggered by authority over an account rather than by owning what sits in it, so a partner or counsel who can instruct a client or trust account abroad may have a reporting duty with no beneficial interest and nothing to pay. Firm accounts, escrow accounts and estate accounts all raise the question. List every account you can instruct, with the institution, the country and the period your authority ran, then establish which regimes apply to you. Do that before a year closes rather than after.
Does keeping equity in my old firm keep me taxable there?
It keeps a source of income there, which is not the same as keeping you resident. Retained equity or a continuing partnership interest usually means allocations, distributions or a later realisation with a connection to that country, and a treaty decides which country has the prior claim over each of those. It can also complicate a departure position, because an interest retained in a business at home is one of the ties a revenue authority weighs when it disputes when you left. Decide before you go whether the interest is being kept for a commercial reason or by inertia.
Is deferred pay taxed when it is earned or when received?
Two different questions hide in that one. The year it goes on a return is usually set by the receipt or vesting rules of the country taxing it. Which country is entitled to tax it is usually decided by where the services were performed. That is why deferred compensation is a frequent source of mismatched relief for lawyers who move: one country taxes on receipt after the move, the other taxed the same earnings when they arose, and the relief has to be claimed in a year that may already be filed. Map the earning period first, then each country's timing rule.
I moved in-house overseas. What happens to my unpaid partnership entitlements?
They keep arriving, and they keep their character. Amounts still owed to you by the partnership, whether undrawn profit, a capital repayment, an annuity or a final allocation, are generally taxed on the basis of what they are and when the underlying work was done, not on the basis that you now hold a salaried post elsewhere. Your new employer's payroll will account for none of it. Get the exit schedule from the partnership in writing before you leave, with the amounts and the years they relate to identified, and plan the returns around that schedule.
What happens if the two countries disagree about which of them can tax me?
The treaty has a procedure for exactly that. You apply to the competent authority in your residence country, which takes the case up with its counterpart, and the two negotiate a position that removes the double taxation. Some treaties add binding arbitration if they cannot agree. It is slow and it runs on documents, so the practical work is preserving the record and filing protective claims while the clock runs. See our treaty work.
What is a permanent establishment, and how easily do we create one?
A taxable presence in another country under the treaty — typically a fixed place of business such as an office, branch, factory or workshop, or a dependent agent habitually concluding contracts on your behalf. Some treaties add a services test measured in days. Purely preparatory or auxiliary activity is excluded, but that carve-out is narrower than it sounds: one senior employee working from home in the other country, with authority, has been enough. See business profits and permanent establishment.
