Do I report the amount that reached my bank or the gross?
The gross, in almost every residence system, because the foreign tax was paid on your behalf and out of your income. The net figure is what survived the deduction; it is not the size of the receipt. This matters twice over. Report the net and your income is understated, which is a problem in itself. Report the net and claim credit for the foreign tax as well, and the two figures no longer describe the same transaction, which is the sort of internal contradiction that invites a query. Grossing up is simply restating the receipt at its pre-tax size so that income and credit describe one event.
How do I work out the gross when I was only paid the net?
From the payer's documentation rather than from arithmetic. A remittance advice, a withholding certificate or a statement from the paying institution should show the amount charged and the tax deducted, and those two together are the gross. Where the rate applied is known and documented, the gross can be derived from the net, but a derived figure needs the rate evidenced rather than assumed, because the rate actually applied is often the payer's domestic rate and not the treaty rate you expected. If nothing is available from the payer, ask for it before filing. Rebuilding a gross figure from a bank credit alone leaves the claim resting on your own estimate.
What proof do I need that foreign tax was withheld?
Something issued by the payer or the foreign authority that ties an amount of tax to your income. Withholding certificates, remittance advices and payer statements all do this. A bank credit showing a round net amount does not, because it cannot tell anyone what was taken or by whom. Keep the document that names the payer, the income and the deduction, and keep it in the currency it was issued in. If the residence authority asks why the reported income is larger than the money received, that document is the whole answer, and it is far easier to obtain in the year of payment than several years later.
My contract says my fee is paid net of taxes, what does that mean?
It usually means the payer has agreed to bear any withholding, so that you receive the agreed figure whole. The tax is still charged on your income, which makes your taxable receipt the agreed amount plus the tax the payer handed over, not the amount you banked. That is a gross-up clause, and it quietly increases your reported income. Two things follow. Get the payer's evidence of what was actually remitted, since you cannot compute the grossed figure without it, and check whether the clause makes the tax borne by you rather than by the payer, because that is what decides who is entitled to relief for it.
Which exchange rate do I use when grossing up a foreign payment?
The residence country's own translation rule decides it, and the answer is generally tied to the date the income arose or was paid rather than to the year end. The point to be careful about is consistency. The gross income, the foreign tax and any later refund should be translated on the same stated basis, so that the credit and the income still describe one transaction after translation. Write down the basis you used on the working paper. Where a payment stream runs through the year, an average applied consistently is usually easier to defend than a mixture of spot rates chosen after the event.
Does grossing up mean I end up paying more tax?
It increases your reported income, and whether it increases your tax depends on the relief that travels with it. The reason for grossing up is that relief for the foreign tax is given against your own tax on the whole receipt, so the larger income and the credit arrive together. Where the credit is capped at the residence country's tax on that income, the net effect can be neutral or close to it. Where the foreign tax exceeded that ceiling, the grossed income is taxed and part of the foreign tax goes unrelieved. Reporting the net instead would not fix that; it would simply understate the income.
What is a totalization agreement and how do I use one?
A social security agreement that stops you contributing to two systems for the same work, and lets periods in both count towards benefit eligibility in either. Which system you stay in depends on the agreement's rules for your situation — a seconded employee usually remains in the home system for a set period, a locally hired one usually joins the host system. You evidence it with a certificate of coverage obtained before or shortly after the assignment starts. See certificates of coverage.
Can I avoid capital gains tax on a foreign property?
Not by virtue of it being foreign — there is no exemption for that, and the "keep it offshore" advice you may have read is how people acquire penalties rather than savings. What genuinely reduces the gain is ordinary and legitimate: principal residence relief where the property qualifies and the designation is made correctly, a properly built cost base including acquisition costs and capital improvements, the timing of the disposition, the treaty rules for real property, and credit for the foreign tax paid. See principal residence and foreign property.
