A status-of-forces agreement, often referred to as a SOFA, is an agreement between a nation that houses armed forces deployed in their country and the nation of those forces. These agreements are sometimes part of a larger series of military agreements that include a broader security agreement. These agreements generally apply to U.S. citizens who work as military contractors outside the U.S. in countries including, but not limited to, Iraq, Afghanistan, and South Korea. Why are armed forces status arrangements important for expatriates? Because they can determine where military contractors should pay taxes – and where they should not. Exemption from income tax provided for in a contract or other international convention (e.g. B SOFA) does not in itself prevent you from being a bona f or herd in a good faith resident of a foreign country. Whether a treaty prevents you from becoming a bona foi resident of a foreign country is determined in accordance with all the provisions of the treaty, including specific provisions relating to residence or privileges and immunities. If you don`t need one of the agreements immediately after World War II, like the SOFA with Germany or the NATO General Agreement, you probably won`t be able to find it.
Many agreements are classified. Recent agreements have never been published. If you need to check your tax situation as part of a particular agreement, contact your contract manager for the person in your organization with the corresponding release. It is very likely that you have to rely on that person`s understanding for the deal, as it relates to you. Perhaps, but you will most likely have to use the physical presence test to claim exclusions of income acquired abroad. The Status of Force Agreements (SAAS) and other similar agreements, such as multilateral defense agreements, provide for special tax exemptions, usually through the taxation of the host country for U.S. visitors. As you may know, U.S.
citizens and green card holders must file U.S. income tax returns to report their global income, wherever they live and work. But what about foreign taxes? Often, the Status of Forces Agreements (SOFA) contains provisions that would exempt military contractors from paying taxes to their host country. . . .