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Territorial tax - income source

glengoolie

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Mar 30, 2021
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I would like for someone to clarify the territorial tax system for me. Specifically, many of these countries clearly state that "foreign income" or "income source from outside" is not taxed. And I think it is crystal clear, but some people say that this is false and you can get paid by a foreign entity, but if you do the work within the country with territorial tax system, this income will be taxed anyway.

So what's the reality here - is the source of income or the place of work that matters?
 
It's complex and depends on the country and also the text of each countries tax code. There is not one rule for all territorial tax systems.
 

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