What makes professional services firms different from an ordinary filing?
Partnership income is allocated by rules that ignore where a partner happens to live, so an internationally mobile partner group creates allocation and credit questions the firm has to solve centrally. An ordinary preparer applies the general rule and stops there, which is how the relief in the specific provision goes unclaimed.
Can you work with my existing accountant?
That is how most of these engagements run. They keep the domestic file, we take the cross-border piece, and the boundary is agreed in writing so nothing is done twice or missed.
How is partnership income allocated when partners live in different countries?
The allocation is made under the rules of the jurisdiction whose partnership law and tax code govern the firm, and those rules look at the partnership agreement and at where the profit was earned. They do not ask where an individual partner happens to be resident. So a partner who has moved abroad is still allocated a share computed centrally, and then has to work out what their country of residence does with that share. The two systems can disagree on the amount, on the year, and on whether the entity is transparent at all. That is why the allocation question is solved at firm level and never by the individual partner alone.
Do I pay tax where my firm is based or where I live?
Usually both, with relief claimed to stop the same profit being taxed twice. Your country of residence generally taxes your worldwide share. The country where the firm operates generally taxes the profit arising from work carried on there, often collecting it through the firm. Relief then depends on the two systems agreeing on what the income is and when it arose. The failure mode is timing: the firm allocates on its own year end, your residence country taxes on its own, and the credit arrives in a year where there is nothing to set it against. It is a sequencing problem as much as a rate problem.
Who pays payroll tax when we second staff to another office?
It depends on which entity is the real employer during the secondment, not on which one runs the payroll. Look at who directs the work, who bears the cost, who can terminate the assignment and who carries the risk of the output. Where the host office effectively employs the person, host payroll obligations arise from the start of the assignment even if the home office keeps paying the salary and recharges it. The recharge itself is a second question, because it may be a service fee, an employment cost reimbursement, or something the host country will not allow as a deduction without support.
Does client work performed abroad register our firm for tax there?
It can, and this is the exposure most firms carry without knowing. A presence is created by people carrying on the firm's business in a place, not by having an office lease. Repeated visits to a client site, a partner working from a home in another country, or a long engagement staffed continuously can all amount to a place through which the business is carried on. The consequence is a filing obligation and an exercise attributing a share of the firm's profit to that place, often for years already closed at home. Finding it yourself puts the firm in a different position from being found.
Can a partner claim credit for tax the firm paid abroad?
Often, but only where the residence country accepts that the tax was imposed on that partner's own income. Where the firm is transparent in both systems, the tax paid abroad on the partner's share is usually creditable to that partner. Where one system treats the firm as transparent and the other treats it as a taxable entity, the tax was paid by a different person for credit purposes and the claim can fail on that ground alone. The mismatch is structural, not an error in the return, and it is resolved by looking at the entity classification in both countries before the allocation is made.
Do we need to file in a country where we only visit clients?
Visiting is not automatically enough, but a pattern of visiting can be. The tests look at duration, at continuity and at whether the firm has a place at its disposal, which can include space at a client's premises used regularly over a long engagement. Some treaties also treat services performed in a country over a sustained period as creating a presence in their own right. The honest answer for most firms is that nobody has measured the pattern. Pull the travel and time records for the engagements in question first, because the facts decide this and the facts are already in your practice management system.
Is "fund transfer pricing" the same thing as transfer pricing?
No — and if you came here to calculate FTP, this is not it. Fund transfer pricing is a bank's internal allocation of funding costs and benefits between its own business units, a treasury and asset-liability management discipline used to measure branch or product profitability. Tax transfer pricing is about prices between legally separate related parties across borders, and about which country taxes the resulting profit. The words overlap; the fields do not. See our transfer pricing work.
What happens if the two countries disagree about which of them can tax me?
The treaty has a procedure for exactly that. You apply to the competent authority in your residence country, which takes the case up with its counterpart, and the two negotiate a position that removes the double taxation. Some treaties add binding arbitration if they cannot agree. It is slow and it runs on documents, so the practical work is preserving the record and filing protective claims while the clock runs. See our treaty work.
