Update January 2024 …
I had completely forgotten about this post. But, there have been a couple of recent comments (see below) asking about how the Christensen case might align with the U.S. Australia tax treaty. What follows is link to the post I wrote on Christensen.
Bottom line: I don’t think the France and Australian tax treaties are similar in the relevant aspects. I may write a post explaining this in more detail. But, for the moment is here is my post about Christensen. If you read carefully you will see why I think the situation is different.
http://citizenshipsolutions.ca/2023/10/24/bonjour-part-2-us-citizens-living-in-france-can-use-french-tax-as-a-credit-to-offset-the-obamacare-surtax/
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Introduction
The above tweet references a post which I wrote on August 7, 2016 which discussed the (August 5, 2016) decision of the United States Court of Appeals – District of Columbia Circuits in the Esher case. In this case, Justice Millet ruled that:
That extreme reading of the Totalization Agreement rests on nothing more than the Commissioner’s own say-so. It lacks any grounding in the Agreement’s text or in any principle governing the interpretation of international agreements. The tax court’s corresponding disregard of the Totalization Agreement’s textual direction concerning the role of French law in resolving undefined terms and in determining the content of the laws enumerated in Article 2(1)(b) was error and requires reversal.
The complete decision is here:
FRENCH-TAXES-US-COURT-REVERSAL-5-AUG-2016-1
The general point is this:
When interpreting international tax treaties the United States is not permitted to consider ONLY U.S. law when interpreting the treaty. The United States (and the treaty partner country) is required to consider each country’s expectations of what the treaty meant and how it might be interpreted with respect to laws that did not exist at the time the treaty was signed.
I concluded that post with my thought that:
The court ruled that international tax treaties must be interpreted in the context of what were the expectations of the country when the treaty was signed. This may open up the possibility of reconsidering how various U.S. tax laws may affect the residents and citizens of other nations.
For example: To what extent was or is it the expectation of a country that it can be interpreted to allow the U.S. to impose punitive taxation on those who are primarily citizens of and factually residents of other nations?
Time will tell.
The 3.8% Obamacare surtax and Americans abroad …
As the articles in the above tweets demonstrate, the 3.8% Obamacare surtax (assuming it’s applicability to Americans abroad) is considered to be:
– a form of pure double taxation when applied to Americans abroad
– more likely to be paid by Americans abroad than by Homeland Americans
– a way to force Americans abroad to pay for the medical care of Homeland Americans
– a costly compliance nightmare
– an example of “Boldly Go, where no regime of citizenship taxation has ever gone before”
#YouCantMakeThisUp!
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