Double-Taxation of Royalties paid for in Korea to a US Company
If treaties are involved for something other than exempting student wages on campus, you shouldn't do it yourself but talk to a licensed US tax adviser (EA/CPA licensed in your state) who's well-versed in the specific treaty. Double taxation provisions generally mean that you can credit the foreign tax paid to your US tax liability, but in the US you can do that regardless of treaties (some countries don't allow that). Also, if you're a US tax resident (or even worse - a US citizen), the royalties related treaty provision might not even apply to you at all (see the savings clause). FICA taxes are generally not part of the income tax treaties but totalization agreements (social security-related taxes, not income taxes). Most countries who have income tax treaties with the US - don't have social security totalization agreements. Bottom line - talk to a licensed professional.
But it's not tax evasion. They are trying to avoid the US's double dipping on foreign income -- an unjust tax if there ever was one. If the money is made overseas then the US government shouldn't have any right to it. I mean, they didn't build any of that infrastructure. That's the way it works in most countries. Their fair share is 0. It means you must pay federal (and possibly state) tax on any income you produce in America -- including Internet and mail-order sales. Tax treaties may keep you from having to pay tax on it again in your own country, or may not. "The elephant in the room is the research. From the article it seems to conclude that the majority of the research happened in the US, but Microsoft is claiming it happened overseas.  From what I've seen a lot of *initial* research does happen in Microsoft international offices, all further development to bring it to market might be done in the US but the idea sprung elsewhere.   From a taxation perspective you can argue that the patent was invented offshore and profits should be allocated there, or you can argue that it was the US development investment that made it profitable and so profits should be allocated in the US. Both are right - and this makes the US so interesting to invest in.   If you invest in the US and then license offshore to sell back to a US entity - thats just exploiting a loophole. If it was invented offshore, thats what the laws are trying to protect.   Personally I think Microsoft is doing pretty well here, like the demo of translations from chinese sign language to english - MSR Asia invented it, but it will be US teams transform it to a feature that derives income. Where should it be taxed if it does become a real product? How many other areas of Windows, Visual Studio, Office, Azure were ""invented"" by non-US teams and should also be taxed offshore?" This doesn't make much sense. What costs are you referring to? And aren't they using roads, airports etc that federal money goes into? Do you think payroll taxes paid through employees should be the major consideration on payment of taxes for corporations? Also, do you think European criticism of Amazon for avoiding paying taxes is off-base? Surprisingly enough, this one isn't actually all that complicated.  No, you will not be taxed twice. Dividends are paid by the company, which in this case is domiciled in Spain.  As a Spanish company, the Spanish government will take dividend witholding tax from this payment before it is paid to a foreign (i.e. non-Spanish resident) shareholder. What's happening here is that a Spanish company is paying a dividend to a Malaysian resident.  The fact that the Spanish stock was purchased in the form of an ADR from a US stock market using US dollars is actually irrelevant.  The US has no claim to tax the dividend in this case. One brave investor/blogger in Singapore even set out to prove this point by buying a Spanish ADR just before the dividend was paid.  Bravo that man! http://www.investmentmoats.com/money-management/dividend-investing/how-to-calculate-dividend-withholding-taxes-on-us-adrs-for-international-investors-my-experience-with-telefonica/ You're missing the point. The US is double dipping as the jurisdiction where the money was earn and taxed too the first dip. It is direct interference in another country's economy and an attack on their sovereignty. Frankly, it smack of typical American conservatism: taking the view that the rest of the world is just an American colony. It's fundamentally undemocratic. "I also don't know the specific details for Finland and/or Belgium, however many countries have tax treaties, which generally prevent double taxation (i.e., paying tax in both countries on the same base income). Being that both Finland and Belgium are EU member states, I'm quite certain there's a provision that covers this, and the same would apply: You pay taxes on what you earn while in Finland to Finland, and to Belgium what you earn while in Belgium. All of this is similar to what you presented, however there's also a section where you'd declare how much taxes were paid in other countries. One other thing to note, which will be the determining factor in the above, is whether EU law requires you to change residence to BE for the time you're there. If not  then you'll be paying taxes in Finland the entire time on the entire amount. This comes from an Irish governmental site: ""By working in another member state and by transferring your residence there, you are likely to become ""resident for tax purposes"" there. The definition of fiscal residence varies from one member state to another. You must comply with the laws of the country where you have established your residence. The laws on personal taxation vary considerably from one member state to another and you may be liable for taxation in more than one country. In general, you are subject to income tax in the country where you are living but this may not be the case if you are a “posted worker” – see below. In general, property is taxed in the country in which it is situated but, again, there are variations. Tax agreements have been concluded between most of the member states of the EU, which are intended to avoid double taxation, if you derive income from different countries. In general, national fiscal rules must respect the fundamental principle of non-discrimination against nationals of another EU country.""" No he's arguing for a lower US Corporate tax rate specifically on overseas earnings. Because companies are earning overseas and not taking it back to the US because of our double taxation.   He absolutely does not want higher taxes "What theyre fishing for is whether the money was earned in the U.S.  It's essentially an interest shelter, and/or avoiding double taxation.   They're saying if you keep income you make outside the US in a bank inside the US, the US thanks you for storing your foreign money here and doesn't tax the interest (but the nation where you earned that income might).   There is no question that the AirBNB income is ""connected with a US trade or business"".   So your next question is whether the fraction of interest earned from that income can be broken out, or whether IRS requires you to declare all the interest from that account.   Honestly given the amount of tax at stake, it may not be worth your time researching.   Now since you seem to be a resident nonresident alien, it seems apparent that whatever economic value you are creating to earn your salary, is being performed in the United States. If this is for an American company and wages paid in USD, no question, that's a US trade or business. But what if it's for a Swedish company running on Swedish servers, serving Swedes and paid in Kroner to a Swedish bank which you then transfer to your US bank? Does it matter if your boots are on sovereign US soil?  This is a complex question, and some countries (UK) say ""if your boots are in our nation, it is trade/income in our nation""... Others (CA) do not.  This is probably a separate question to search or ask. To be clear, the fact that your days as a teacher or trainee do not count toward residency, is a separate question from whether your salary as same counts as US income." It's technically correct to say BK will still pay taxes on all profits made here in the US, the problem here is that it's very easy to structure this whole thing so that there are no US profits.   Company A sells itself to Company B, which it also owns. Company A transfers all its' intellectual property to Company B which then charges Company A a fee to use it. The fee is structured so that Company A makes zero profit and Company B makes all the money. So you gonna not do business with essentially every multinational corporation?  Bribery is necessary to get things done in many many countries across the world. Plus you are taking samsung to task for playing ball with their now disgraced president who had some mystic pulling her strings.   If they were bribing US officials, sure, but different countries play by different rules  Hell if i remember correctly the IRS allows businesses to make deductions based on foreign bribes Every country has its own tax code.  Consult a professional in each country regarding income earned in that country. Anything else is speculation. You clearly have no understanding of the issue.  As an example, lets say Apple sells an iphone in France.   Apple has to pay income tax and tarrifs and whatever else on that money they receive for the iphone they sold. That makes sense, they use France's infrastructure and citizens to sell the phones.   Then when the money comes back to the US (the money is not coming back at this time), Apple is taxed on the same money from the iPhone they just paid taxes on in France. That makes selling iPhones outside of the US difficult due to tax law and regulations that other companies don't have to deal with. This makes it easier for other phone manufacturers to sell phones at a profit and not Apple. This hurts Apple at the end of the day and keeps the money in foreign countries when it could be re-invested in the US...  What is the point of selling internationally if you are going to have to pay two sets of taxes and likely lose money? There is no such thing as double taxation. If you pay tax in the US, you CAN claim tax credits from India tax authority.  For example, if you pay 100 tax in USA and your tax liability in India is 200, then you will only pay 100 (200 India tax liability minus 100 tax credits on foreign tax paid in the USA).  This is always true and not depending on any treaty. If there is a treaty, the tax rate in the United States is set on the treaty and you CAN claim that final tax rate based upon that treaty.  If you operate an LLC, and the income is NOT derived from United States and you have no ties with the US and that LLC is register to a foreign person (not company but a real human) then you will not have to submit tax return in the US... I advice you to read this: http://www.irs.gov/businesses/small/article/0,,id=98277,00.html "Tax US corporate ""persons (citizens)"" under the same regime as US human persons/citizens, i.e., file/pay taxes on all income earned annually with deductions for foreign taxes paid.  Problem solved for both shareholders and governments.  [US Citizens and Resident Aliens Abroad - Filing Requirements](https://www.irs.gov/individuals/international-taxpayers/us-citizens-and-resident-aliens-abroad-filing-requirements)  &gt;If you are a U.S. citizen or resident alien living or traveling outside the United States, **you generally are required to file income tax returns, estate tax returns, and gift tax returns and pay estimated tax in the same way as those residing in the United States.**  Thing is, we know solving this isn't the point.  It is to misdirect and talk about everything, but the actual issues, i.e., the discrepancy between tax regimes applied to persons and the massive inequality it creates in tax responsibility.  Because that would lead to the simple solutions that the populace need/crave.  My guess is most US human persons would LOVE to pay taxes only on what was left AFTER they covered their expenses."