Does supervising construction abroad create a tax presence for my practice?
It can, and it is a common way a practice becomes taxable in a project country. Design work produced in your own studio is generally taxed where the practice is established. Site supervision is different. Your people are working at a fixed location in the other country, day after day, under the client's programme. That pattern is what host tax authorities look for when they decide whether you have a taxable presence there. The question is not whether you rented an office in that country. It is whether the site itself has become one for tax purposes, and for how long.
We invoice design and site supervision together — is that a problem?
It makes the analysis harder than it needs to be. One invoice for one fee tells the host tax authority nothing about where the work was done, so the default assumption tends to be the one least helpful to you, that the whole fee relates to activity in their country. Split the engagement in the contract, not just on the invoice. Say what the design stage consists of, where it is performed, and what the supervision stage consists of. Then bill the two stages separately and keep the time records behind them. The paperwork that supports an apportionment has to exist before the question is asked.
Why has the withholding on our foreign architecture fees never come back?
Usually because nothing was ever filed to get it back. Withholding is deducted by the client at the point of payment, and it is normally applied to the gross fee rather than to your profit on the job, so it routinely exceeds the tax actually due. It sits there until either the host country refunds it on a return, or your home country gives credit for it against tax on the same income. Both routes need documents: the deduction certificate from the payer, and a return that reports the foreign income. Practices that treat the deduction as a cost of working abroad tend never to reclaim it.
How long can our architects stay on a foreign site?
There is no single answer, because the threshold depends on the treaty between the two countries and on what the staff are doing. Two clocks usually run at once. One is about the practice, and asks how long the site has been a place through which you carry on business. The other is about the individual, and asks how many days each person spends in the country and who bears the cost of their pay. They can give different answers on the same project, so one engagement may create an obligation for the firm, for the staff, or for both. Count days per person from the start, in writing.
Is a competition entry or concept design taxable in the project country?
Usually the design itself is not, if it is produced at home and the practice has no presence in the other country. A competition entry is drawing work rather than activity carried on there. The point to watch is what happens if you win. Site visits, briefing meetings, planning hearings and then supervision all follow, and each of them puts people in the country. The unpaid stage is often the one that establishes the relationship, and the taxable stage arrives with the appointment. Decide the structure at appointment, while the contract is still being drafted, rather than after the first mobilisation to site.
Do we have to register the practice in the project country?
Possibly, and registration is frequently the first foreign obligation a practice meets, well before any income tax falls due. Depending on the country it may be an indirect tax registration, a licensing requirement for the design profession, a permit to employ your own staff on site, or a filing that lets the client pay you without deducting tax at the default rate. These obligations often have nothing to do with profit. They follow from the contract, or from people working there. Ask the client's legal team what a foreign consultant has to register for before the appointment is signed.
Can I take the foreign tax credit and the Foreign Earned Income Exclusion together?
On the same income, no — you cannot exclude income and then claim credit for foreign tax on the part you excluded. You can use both in one return on *different* income: exclude qualifying earned income, then claim credit for foreign tax on what remains, such as investment income or earnings above the cap. Which combination leaves you better off is an arithmetic question on your figures. Our FEIE vs foreign tax credit calculator works it through.
Which countries have a tax treaty with the United States?
Around sixty, including Canada, the United Kingdom, India, Australia and most of western Europe — but the list matters less than the terms, because each treaty caps rates and allocates income differently. Two countries with treaties can produce opposite answers on the same pension or the same royalty. What decides your position is the specific article covering your income type. See our country guides.
