double taxation
Double taxation is being taxed twice on the same income, usually in two countries, and treaties exist to stop it happening to you.
In plain English
You live in Lagos and earn from a client in London. Or you live in Manchester and earn rent from a flat in Abuja. Two countries may both feel entitled to tax that money, and without a rule, both would.
Double taxation is exactly that. The same income taxed twice, in two places, for no reason other than that it crossed a border.
Countries sign double taxation agreements to prevent it. These treaties decide which country has the primary right to tax particular kinds of income, and provide relief, usually as a credit for tax already paid elsewhere. Nigeria has such agreements with a number of countries, and which ones matters enormously to any diaspora Nigerian.
The mistake people make is assuming that paying tax in one country means they owe nothing in the other, and that assumption has produced some extremely expensive surprises. Relief is usually a credit rather than an exemption, and it frequently requires you to file in both places even when you owe nothing in one of them.
Filing and paying are different obligations, and people conflate them constantly.
If your money crosses a border, get proper advice once. It will cost less than the penalty for finding out slowly.
You live in the UK and earn rent from a Nigerian property. Nigeria taxes the rent. The UK also expects to know about it. A treaty may give you credit for the Nigerian tax paid, and you generally still have to declare it.
Questions people ask
What is a double taxation agreement?
A treaty between two countries deciding which has the primary right to tax particular income, and providing relief so the same money is not taxed twice.
Does Nigeria have these treaties?
With a number of countries, yes. Which ones apply to you depends on where you live and where the income arises, so check specifically.
Do I still have to file in both countries?
Frequently yes, even where relief means you owe nothing. Failing to file is a separate offence from failing to pay.
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