Can a country tax a foreign national more heavily than its own?
That is what a non-discrimination article is written to prevent. It compares nationals of one state with nationals of the other in the same circumstances, and forbids the heavier charge on the foreign national. The comparison is the whole battleground. A charge is not discriminatory merely because it falls on a foreigner. It is discriminatory when the person it falls on is in the same circumstances as a national who is charged less. So the work is to identify the local comparator the rule treats better, and to show that nationality, rather than some other permitted difference, is what separates them.
Does the non-discrimination article mean I am taxed like a resident?
No, and this is the most common misreading of it. Residence is itself one of the circumstances the comparison takes into account, so a country may tax residents and non-residents differently without breaching the article. A resident is generally taxed on worldwide income with the personal reliefs that go with it; a non-resident is taxed on a narrower base. Those are different circumstances, not discrimination. The article bites where two people in genuinely comparable positions are treated differently because of nationality, or where a branch of an enterprise of the other state is treated worse than a domestic enterprise doing the same thing.
Which taxes does a non-discrimination article apply to?
Often more than the rest of the treaty does. Many agreements limit their other articles to specified taxes on income while drafting the non-discrimination article more widely, so it can reach charges the rest of the treaty never touches. That has to be checked in the wording rather than assumed, because it varies from agreement to agreement. It matters in practice when the complaint concerns a local or an indirect charge, where the answer may be that this article covers it even though no other article in the treaty would.
Can the non-discrimination article get me a relief I was refused?
Only if a comparable domestic person would have received it. The article is an equal-treatment rule, not a grant of relief. It cannot create a deduction, credit or exemption that the country gives to nobody, and it does not entitle you to the more favourable of two countries' rules. What it can do is remove a condition whose only real effect is to exclude nationals of the other state, or enterprises owned by them, from something local persons get. So the first question is always what the domestic comparator actually receives, and on what conditions.
Is my branch taxed worse than a local company in that country?
That is a question the non-discrimination article addresses directly in most treaties. The standard is that a branch of an enterprise of the other state should not be taxed less favourably than a domestic enterprise carrying on the same activities. The comparison is on the taxation of the branch, not on every administrative difference, and differences that follow inevitably from the branch being part of a larger foreign enterprise are not automatically breaches. In practice we compare the rate, the base and the reliefs available, item by item, against the domestic equivalent before forming a view.
Is it discrimination if a payment to a foreign recipient is not deductible?
It can be. Some treaties address deductions specifically, requiring that payments to a resident of the other state be deductible on the same conditions as payments to a local recipient. Where that provision appears, a rule denying the deduction only because the payee is abroad is the kind of difference this article is aimed at. Where it does not appear, the argument is harder and falls back on the general comparison. Either way the analysis starts with the article's own wording, because treaties differ here more than people expect them to.
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.
Is double taxation legal?
Yes. Nothing prevents two countries from taxing the same income under their own domestic law — each is exercising its own jurisdiction. What treaties and credit systems do is relieve the outcome rather than prohibit the charge, and relief is generally something you must claim on a return or a form, not something applied automatically. Miss the claim and the double charge stands. Double taxation explains the mechanism.
