World income principle

the world income principle mentioned that the citizens of a state are taxable on their world-wide income, independently of their domicile. According to the world income principle the tax liability of a citizen ends only with task of the nationality.

For the avoidance of cases of hardness with citizens, who have their domicile abroad, most states, which tax according to world income principle, with other States of double taxation agreements locked, since in most countries also the domicile land principle becomes effective, so that in this case two states have at the same time requirement on taxation of the world-wide income. After most double taxation agreements such conflicts more differently national regulations are regulated. Likewise taxes, which are paid at other states, under certain circumstances with the tax liability in the country of the nationality can be charged. A prominent example of a country, which taxes according to world income principle, are the USA.

Most European countries, however, tax only according to domicile land principle. Afterwards it is relatively simple for persons with a high income to escape with the shifting of the main domicile to a country with low taxes, from the tax burden in its homeland. Such people are called in the vernacular of tax refugees. For example tax evasion is accused to the former German tennis player Boris Becker, after it indicated to have in Monaco its main domicile.


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