A designer in Amsterdam bills a California startup, a British consultant coaches teams in Tokyo, a SaaS founder in Tallinn targets the entire planet. In each case the same euro, pound or dollar risks being taxed twice: once where the money is earned, again where its owner lives. Double taxation erodes margin, complicates cash flow and—if left unattended—can even trigger penalties for under-withholding. Yet most of the pain is avoidable when you combine treaty rules, local forms and disciplined record-keeping.
Know where you are really “at home” for tax purposes
Tax authorities decide residency before they decide anything else. The default test is usually the number of days you spend in a country, but treaties add tiebreakers such as where your permanent home is kept or where “centre of vital interests” lies. Misjudging residency can expose the same fee to two income-tax systems, so pin down the facts early and keep boarding passes or lease contracts as evidence.
Lean on the bilateral tax-treaty network
Almost every developed nation has signed an agreement based on the OECD Model Convention that limits or eliminates withholding on business profits earned by non-residents. Under most treaties independent services are taxable only in the provider’s home state unless the work creates a “permanent establishment” abroad—typically an office, dependent agent or long onsite project. When a client tries to withhold 15 % “just in case,” point to the relevant article, supply a certificate of residence from your tax office and request zero-rate treatment.
Prove your status with the right paperwork
For U.S. payers, the go-to form is the W-8BEN. It tells the client you are non-U.S., claims the article that cuts withholding to 0 % or 5 % and must be refreshed every three years. The IRS updated the instructions to demand extra wording when a contractor relies on the “no permanent establishment” clause. In the UK, HMRC issues a digital certificate of residence that serves the same purpose.
Keep scans of every certificate, form and acknowledgement email; they are the first thing a revenue auditor will ask for if a treaty rate is challenged.
Use credits and exclusions on the home-country side
Even if foreign tax is collected, you are not stuck paying it twice. Most jurisdictions grant a foreign tax credit that reduces domestic tax, up to the amount already paid abroad. U.S. citizens may instead exclude up to $130 000 of foreign earned income for 2025 if they meet the bona-fide-residence or physical-presence tests. Credits usually offer better long-term value because they preserve carry-forward losses, but run the numbers each year.
Watch for treaty overrides and terminations
Governments sometimes suspend treaties for geopolitical reasons. The UK, for example, revoked its tax treaty with Russia effective April 2025. In such cases withholding snaps back to domestic law and credits may be restricted. Subscribe to your finance ministry’s treaty alerts or an international-tax newsletter so changes never catch you off-guard.
Keep an eye on the EU dispute-resolution mechanism
When two EU states still cannot agree, a 2019 directive forces them into binding arbitration if the taxpayer requests it. The system imposes strict timelines and has sped up resolution of transfer-pricing clashes and residency conflicts alike. Similar peer-review pressure under the OECD’s BEPS Action 14 keeps the rest of the world moving in the same direction.
Practical habits that close the loop
- Invoice in the currency and with the tax-residency address that matches your certificate of residence.
- Ask every new client up front whether they must withhold tax; send them the treaty article and form if the answer is yes.
- Reconcile foreign-tax credits quarterly, not just at year-end, so surprises surface while books are still fresh.
- Store contracts, travel logs and site-access badges; they prove whether a permanent establishment exists.
- Schedule an annual check-up with a treaty-aware adviser before you cross day-count thresholds or hire staff abroad.
Double taxation looks inevitable only until you organise the paperwork. The combination of a clear residency story, treaty forms filed on time, and home-country credits or exclusions usually pushes the effective second tax bill to zero—or at least close enough that overseas work remains profitable. A few hours each year spent on certificates and calendar counts is cheaper than paying the same tax twice.