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Tax Treaty

A tax treaty is a bilateral agreement between two countries designed to prevent double taxation and define tax obligations for cross-border income. The US has tax treaties with approximately 65 countries including Japan, the UK, Germany, Canada, and South Korea. Treaties can reduce or eliminate withholding taxes on dividends (typically 15% instead of 30%), interest, and royalties. They may also determine which country has primary taxation rights on specific income types. Claiming treaty benefits requires filing Form 8833 with your US tax return.

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