Why do some overseas customers withhold tax from our invoices?
Because their country treats what you supply as a payment that carries withholding, commonly where software or subscription revenue is characterised as a royalty rather than as a service. The customer's finance team is applying its own local rule and its own reading of your contract. Two customers in different countries can therefore treat identical invoices differently, and both can be correct under their own law. What matters to you is whether the characterisation holds under the treaty between your country and theirs, whether relief or a reduced rate is available, and whether you hold the documentation needed to claim it. That is a contract and evidence question before it is a tax return question.
Is our subscription revenue a service or a royalty?
It depends on what the customer actually receives, and different jurisdictions read the same arrangement differently. A right to use software, particularly where the customer may copy, modify or redistribute it, tends towards royalty treatment. Access to a hosted service the customer cannot take away, operated by your own team, tends towards services. Most real contracts contain elements of both, which is why the characterisation is argued so often. The practical response is to describe the supply accurately in the contract, separate distinct elements where they genuinely are distinct, and hold a written analysis you can produce when a customer or an authority asks. Silence in the contract invites the other side's characterisation.
Can we recover tax a foreign customer withheld from us?
Sometimes as a credit at home, sometimes as a refund from the foreign authority, and sometimes not at all, and the difference usually comes down to paperwork. A credit in your own country generally requires evidence that the foreign tax was properly imposed and actually paid, which means obtaining the withholding certificate from the customer while they are still answering your emails. A refund abroad usually requires showing that the treaty limited or removed the charge. Both routes fail for the same reason, which is that the certificate was never collected. Build the request into your invoicing process for customers in countries that withhold, rather than going looking at the year end.
Do our engineers in other countries create a taxable presence?
They can, and it is the exposure that grows quietly while a group has one company and staff in several places. A person working for you in another country can create a payroll obligation there and, depending on what they do, a presence that gives that country a claim on part of your profit. The tests differ. Payroll usually follows where the work is physically performed, while the profit question turns on the nature of the activity and whether it is preparatory or central to what you sell. Engineering is hard to argue is incidental to a software business. Review each country where someone works, not only the countries where someone is paid.
Do we have to charge foreign sales tax on digital subscriptions?
In many markets yes, and the answer often differs depending on whether your customer is a business or a consumer. A number of systems treat a digital supply as taxable where the customer is located, placing the collection obligation on the supplier for consumer sales while shifting it to the customer for business sales. That makes customer status a data problem. You need to know, and to be able to evidence, which of your subscribers are businesses. Capture the identifier at sign-up, validate it where a validation service exists, and keep the location evidence your billing platform already gathers. Retro-fitting that data after a registration is required is considerably harder.
What should our contracts say about withholding tax?
At minimum: which party bears any withholding, what happens to the invoiced amount if tax is deducted, and an obligation on the customer to supply the certificate. Contracts written for a single domestic market are usually silent on all three, which is how a company discovers the question by receiving a short payment. Decide deliberately whether your price is gross or net of foreign tax. A gross-up clause moves the cost to the customer, and whether you can hold one depends on your commercial position. Add a description of the supply that supports the characterisation you intend, because the contract is the first document any authority reads.
Do green card holders living abroad have to file US taxes?
Yes. A lawful permanent resident is a US tax resident, taxed on worldwide income, and that status does not end simply because you moved away — it ends when it is formally abandoned or administratively terminated. Two traps follow. Filing as a non-resident on a treaty claim can put the immigration status itself at risk. And ending the status after holding it long-term can bring you inside the expatriation regime. See giving up a green card.
Is moving money between my own accounts in two countries taxable?
Moving your own capital between your own accounts is not itself income, so the transfer is not what creates tax. What can create tax or reporting is the income the money earned before it moved, a foreign-exchange gain on certain holdings, and the reporting obligations the balances themselves trigger — foreign account and asset reports keyed to balances rather than income. Remittances out of some countries also need certification before the bank will send them. See foreign account reporting.
