For non-U.S. executives, relocating to the United States, whether for business or personal reasons, represents a meaningful opportunity, but also significant tax complexity. From compensation structuring and asset reporting to potential exit taxes in the home jurisdiction, the scope of considerations can be substantial. Taking steps early to coordinate with experienced cross-border advisors helps manage both pre- and post-move implications effectively.
Substantial Presence Test
The first question is a matter of whether U.S. tax residency is an option. This determination is often governed by the substantial presence test, which is met if the executive is physically present in the United States for:
- 31 days during the current tax year, and
- 183 days during the current year and the two preceding years, calculated using a weighted formula (all days in the current year, 1/3 of days in the first preceding year, and 1/6 of days in the second preceding year).
Meeting this test generally results in U.S. tax residency, subjecting the executive to U.S. taxation on worldwide income.
In cases where an executive may be considered a tax resident in both the United States and their home country, applicable income tax treaties often provide “tiebreaker” rules. These rules assess factors such as permanent home, center of vital interests, habitual abode, and nationality to determine primary residency.
Worldwide Taxation vs. Territorial Taxation
The U.S. follows a worldwide taxation system, in contrast to the territorial regimes common in many other jurisdictions. As a result, all residents’ income, regardless of source, is subject to U.S. federal income tax. This includes employment income, investment returns, rental income, and gains from the disposition of non-U.S. assets.
For executives transitioning from territorial systems, this shift can materially affect both tax exposure and planning strategies. The timing of income recognition, compensation structuring, and asset dispositions should be evaluated carefully in advance of relocation.
Importantly, U.S. tax compliance obligations extend beyond income. U.S. residents are required to report certain foreign financial accounts and assets annually, including interests in foreign bank accounts, investment portfolios, and other financial holdings. Non-compliance carries significant penalties, making proactive planning essential.
Conclusion
Relocation to the United States can be a pivotal step in an executive’s career, but it brings a complex and far-reaching tax landscape to navigate. A clear understanding of residency rules, reporting obligations, and the interaction between U.S. and foreign tax systems is essential.
With early planning and the right advisory support, executives can mitigate risk, optimize outcomes, and transition with confidence, protecting both personal wealth and broader organizational interests.
About Ricardo:
Ricardo Aramburo Williams is the International Tax Principal and Global Markets Leader at Mowery & Schoenfeld in Miami, Florida, where he helps companies and individuals navigate the complexities of cross-border operations and investments. With more than 20 years of experience, Ricardo advises on U.S. market entry, global expansion, international transactions, and the optimization of multinational structures. In addition to his professional role, Ricardo serves as Chair of the International Advisory Council of the Miami-Dade Beacon Council, where he helps shape the region’s foreign investment strategy and international engagement. He is also Chair for Latin America of the International Taxation Practice Group at GGI Global Alliance, promoting cross-border collaboration and thought leadership; and a member of the Executive Committee of the United States–Mexico Chamber of Commerce Inter-American Chapter, supporting bilateral business growth.