Tax for expats

Hi Everyone

A week back or so, I came across this article on Facebook regarding tax for expats. I then went through my old blog posts and some notes I have written and checked if I have any relevant information regarding tax in India. I have only written one post about why people don’t pay tax.

The first thing I can say about tax is that it is a hazel to pay tax to two different countries! In my case I was employed by an Indian company and try to officially move from Norway to India in order to pay tax only to India. The Norwegian tax authorities refused that. In Norway we pay quite high tax and there are strict requirements for a Norwegian to be considered to live in a different country. The tax authority claimed that as long as I still own a flat in Norway and don’t own any property I still live in Norway. At the point of time when this was decided, I didn’t knew that I would be in India for two years and quickly gave up to “fight” with the Norwegian tax authorities.

So I quickly decided that trying to obey with Indian tax regulations was the best thing to do. But even this noble idea was off course a bit troublesome. In order to pay tax in India you first have to have something called a PAN-card. As I was a foreigner, no one in Indian HR realized that I needed this. But after a number of e-mails and confusion this actually got sorted out quite easily. And honestly, I think that the tax payment as such went quite smooth. Every month I got deducted some money from my salary. I don’t really have any idea what is the correct tax percentage in India, so I just hoped that Capgemini deducted whatever was the correct amount. At the end of the tax year I had to fill some information on-line. Capgemini has chosen Aon Hewitt as their partner. And if it wasn’t for the fact that Aon in the sponsor of Matchester United, I think I could have liked the portal. But now I don’t. As long as you have all the documents that are needed and no special deductions that should be claimed, it isn’t actually that difficult to fill this.

I was suggested to use some agent to fill this for me. And mind you, India is a place where it is common to use servants and get help to everything from driving your car to getting food delivered on your doorstep. But the price that was suggested for my tax advisors was just completely out of this world! It honestly sound like some kind of scam that someone had put up, so I decided not to use it at all.

One other thing that makes taxation in two countries difficult is the fact that Norway and India have different tax years.  In my Norwegian taxation papers I have to fill how much income and tax I paid to India last year. But because a year is different in Norway and in India this things get unnecessarily complicated.

My advice if you are moving to India is to check out a lot up front about what rules that apply for you. Indian tax government is one good place. Your own company should be a different one. Hopefully they can advice you on what is best for you to do.

Talk to you soon

Karsten

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4 thoughts on “Tax for expats

  1. Yes, it will be wise to have a copy of one’s own tax code and that of the host country. Everything should be there: tax treatment for resident and non-resident foreign citizens, when is one considered to be resident foreign individual and when not, items deductible, and items of inclusion. In some countries, if the the alien has stayed for more than 180 days, he is presumed to be doing business in the host country, so, he will be tax as non-resident(or resident depending on his status) alien doing business in the host country. There’s also another treatment for those employed by multi-national companies. Tax treatment also depends on treaties(bi/multi lateral agreement) between the 2 countries. Of course, it is not easy to understand. But it would still be better to at least have a basic understanding on how aliens are tax in another country.

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  2. Any idea about tax for an indian working in Norway in assignment offer(from Indian branch to Norway branch)? 50% of pay is paid in India and 50% is in Norway.

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