The 4 Most Common Mechanisms for Double Tax Relief on Short-Term Assignments

By Patrick Jurgens (re-posted by Michelle Curran)

Many global companies are using short-term assignments to meet talent requirements for projects and skill gaps for short periods of time. As a matter of fact, 55%* of companies said they expected the number of short-term assignments to increase over the coming year. Short-term assignments may be appealing as a company does not have to pay to relocate an entire family and the tax bill can be lower. The key word here is “can,” as there are a number of complexities involved in taxation of short-term assignments.

Taxing Short-Term Assignments

Due to the brief nature of short-term assignments, the employee typically maintains their home country tax residency, which has an impact on the taxes owed. The employee/company may be exposed to potential double taxation where the same earned income is taxed in both the home and host locations. As a result, most countries offer double tax relief.

What is Double Tax Relief?

Double tax relief is exactly what it sounds like -- a means to minimize your tax exposure to avoid paying full taxes in both the home and host locations. There are four ways to claim double tax relief and calculating them by hand is challenging without advanced international tax accounting experience.

The 4 Most Common Mechanisms for Double Tax Relief

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