also called CBT
A system where a country taxes its citizens on worldwide income regardless of where they live, used by very few countries.
Citizenship-based taxation ties the tax net to your passport instead of your address. The United States is the famous case: an American owes a US tax return on worldwide income even after decades abroad, with tools like the Foreign Earned Income Exclusion softening the bill rather than removing the duty. Almost no other country does this.
An American who has lived in Lisbon for years still files with the IRS every spring, on top of any Portuguese obligations. A neighbor from Canada or Germany cut their home country's tax claim loose when they stopped being resident there; the American never can, short of giving up the passport.
American citizens owe US tax and filings no matter where they live, which shapes every nomad-tax decision they make.
The difference is the whole point, so here is each one in a line.
These are the systems for deciding which of your income a country can tax.
Worldwide taxation taxes residents on income from everywhere, territorial taxation only on income earned inside the country, and the remittance basis only on foreign income you actually bring in.
Citizenship-based taxation is the rare system, used by very few countries, that taxes citizens wherever they live.
Remittance basis · Territorial taxation · Worldwide taxation
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