International Activities and Taxes
Although taxes are imposed on Columbia work internationally just as they are imposed for work in the U.S., precisely which taxes are owed is often less clear. University departments should work with the Office of General Counsel (OGC) to seek the advice of local legal counsel or other local experts on tax exemptions and the application processes.
It is particularly important to consider foreign tax requirements for:
- Operations with Columbia employees spending more than 90 days in a country without a tax treaty with the U.S., or more than 180 days in any country (see the IRS page on Tax Treaties for additional information)
- Programs that hire staff locally in an international location (e.g., interns, research assistants, lab assistants, etc.); or
- Programs that generate revenue abroad (including sponsored funds that leave the country of origin).
For assistance with taxes, please contact the Tax Office in the Office of the Controller.
Foreign taxes paid by employees may be offset, at least in part, by reductions in U.S. federal taxes due to the foreign tax credit, foreign earned income exclusion, foreign housing exclusion, and/or foreign housing deduction. In general terms, University units and staff working internationally should carefully consider:
- Personal Income Taxes and Withholding (U.S. and Foreign)
- Payroll Taxes (Including Social Security)
In addition to these individual tax ramifications, Columbia may be subject to necessary registrations and withholdings as the employer depending on the facts and circumstances. Please contact the Office of General Counsel and the Tax Office in the Office of the Controller for assistance with any international employment agreements.
Visit Learn about Taxes While Working Abroad for more detailed information about international payroll and income tax issues.
Please note: Columbia’s practice is not to provide tax advice to employees. Employees working overseas should consult their personal tax advisors with respect to their individual tax obligations.
Columbia is not exempt from income tax in most countries. Columbia-related local entities may be either tax-exempt or for-profit. Therefore, any Columbia activity overseas that produces some form of revenue may expose Columbia to taxation in the country where the activity occurs. Even where no revenue is produced, Columbia may incur filing requirements.
Where a Columbia unit sells goods or services (e.g. books, Executive Education, etc.) abroad, it may be required to collect tax on that revenue and pay the tax to the jurisdiction where the sale was made. Such a tax goes by various names, including sales tax, service tax, goods-and-services tax (GST), or value-added tax (VAT). To pay the tax, Columbia or a related entity will typically need to be registered with the appropriate tax authority; this requires prior consultation with the Office of the General Counsel (OGC) and the Tax office of the Office of the Controller.
Some countries tax funds that leave the country, often including grant funds. This may take the form of a “withholding tax” on payments to non-resident individuals or corporations, such as Columbia. Where they exist, withholding taxes typically range from 10%-35% of the amount received.
When preparing grant proposals for overseas funders, be sure to consider potential withholding taxes in your budget. Projects may in some cases be able to minimize these taxes, though the strategies for doing so will vary depending on the facts of each case. Potential tax reduction strategies may include: working through local partners (who may be able to receive the funds without a withholding tax), spending more of the funds in-country (e.g. by paying travel expenses for Columbia staff in-country rather than from New York), or receiving the funds through an intermediary.
Long-term projects and sites may have difficulty repatriating funds to the U.S. Prior to funding or capitalizing an overseas project beyond what is necessary for immediate expenses, consider how to recover any unspent funds that may remain after the project is completed.
In most countries, Columbia and its related entities are not registered as tax-exempt organizations and/or are only exempt from income taxes. Therefore, Columbia departments must pay tax such as sales tax, value-added tax (VAT), goods and services tax (GST) on overseas purchases (e.g., research equipment, books, etc.).