Worldwide Taxation

Worldwide taxation is a system in which a country taxes its residents or citizens on their income from all sources globally, regardless of where the income is earned or where the taxpayer resides. The United States is unusual in taxing its citizens on worldwide income even when they reside abroad permanently, making it one of only two countries to base taxation on citizenship rather than residency. Double taxation agreements help mitigate the risk of being taxed by two countries on the same income. Renouncing citizenship and establishing tax residency in a territorial jurisdiction is a strategy some high-net-worth individuals use to escape worldwide taxation.