Do I pay tax abroad for a short work assignment?
Not necessarily, and the exemption for short assignments is the whole point of the employment article. But it is conditional, and the conditions are cumulative: presence, the identity of the employer and who bears the cost of the employment all have to stay within the limits the treaty sets. Fail any one of them and the exemption goes, not just the condition you failed. That is why the assignment is worth testing against all three before it starts, when the facts can still be arranged, rather than at the point the host country asks for a return.
Does the treaty count workdays or days I was physically there?
Physical presence, which is a stricter measure than most people assume and the single most common reason a planned exemption fails. Weekends spent in the host country, a holiday taken at either end of an assignment, and travel days all tend to count towards presence even though no work was done on them. The consequence is practical rather than theoretical: an assignment planned tightly against the limit by reference to working days can breach it purely through personal travel. The record to keep is one of days present, not one of days worked.
My host company paid my salary, so does that break the exemption?
It may well. The article conditions the exemption not only on presence but on the identity of the employer and on who bears the cost of the employment, so an arrangement under which the host entity pays the salary, or is recharged for it, can take the exemption away even where the day count stays comfortably inside the limit. What matters is the substance of the cost flow rather than which entity runs the payslip. Intercompany recharges put in place for accounting reasons are a frequent and unwelcome discovery in this analysis.
If the treaty exempts me, does my employer still run payroll there?
Very often, yes. Payroll withholding follows its own domestic rules, so an employee exempt from host-country tax under the treaty can still create a registration and withholding obligation for the employer, sometimes with a formal claim required before withholding can be reduced or stopped. Social security is a third set of rules again, separate from both. Treating these as one question is the mistake behind most of the penalties we see: the individual’s position was right and nobody looked at what the employer was obliged to do.
How is my salary split when I worked in both countries?
Where the conditions for exemption are not met, host-country tax applies to the income for the days worked there, with a credit in the country of residence for the tax paid. So the apportionment rests on the working pattern, and the credit rests on the apportionment. Two consequences follow. A contemporaneous record of where work was performed each day is the foundation of both returns. And the two returns have to be prepared together, because a credit claimed at home for an amount the host return does not support is exactly what an enquiry looks for.
Does social security follow the same rules as income tax?
No, and the assumption that it does is expensive. Social security is governed by its own agreements between countries, with their own conditions, their own certificates and their own coverage periods, and the answer they give can differ from the income tax answer for the same assignment. An employee can be exempt from host-country income tax under the treaty while contributions remain payable somewhere that was not planned for. The two questions are better settled at the same time, before the assignment begins, because some of the relief depends on applying in advance.
How do I claim tax treaty benefits?
Two moments, and the earlier one matters more. Before a payment is made, you give the payer a declaration so they withhold at the treaty rate rather than the domestic one — a W-8BEN for a US payer, an NR301 for a Canadian payer, a residency certificate and Form 10F for an Indian one. After the year ends, you claim the position on a return, and the United States often wants it disclosed there in its own right. Claiming late means asking for a refund instead. See NR301 declarations.
How do I claim a tax treaty benefit?
Three things usually have to line up: proof you are resident of the treaty country, a declaration to whoever is paying you so they withhold at the treaty rate rather than the statutory one, and the claim itself on the return of the country giving relief. Do it before the payment where a reduced rate is available — claimed afterwards it becomes a refund exercise instead, which takes far longer. See certificates of residency.
