After years of cross-border finance experience, the same errors come up repeatedly. None of them are obscure. Most are entirely avoidable. Here are the ones that cost people the most.
Thinking leaving a country ends your tax there
Moving to Dubai does not make you UK non-resident. Moving to London does not automatically end your Indian tax obligations on Indian income.
Each country has its own tests.
- The UK has the Statutory Residence Test, with day counts, ties, and a specific sequence of rules.
- India applies 182-day and 60-day/365-day tests, with a tighter 120-day threshold for certain Indian citizens and PIOs whose Indian-source income exceeds Rs 15 lakh.
- The US taxes citizens and green card holders on worldwide income regardless of where they live.
- The UAE has formal residency criteria from 2023 under Cabinet Decision No. 85 of 2022.
- People often assume they have left the old tax system and stop filing, only to receive assessments years later for income they never declared.
Confusing immigration status with tax residency
A UK Skilled Worker visa does not make you UK tax resident. A UAE residency permit does not make you UAE tax resident for treaty purposes. A US work visa does not determine whether you are a US resident alien.
These are different tests applied by different parts of different governments. They interact, but they are not the same.
Not claiming foreign tax credits
The single most common expensive error is paying tax in two countries on the same income when a treaty or unilateral credit mechanism would eliminate the double charge.
Most countries allow you to credit foreign tax against your domestic liability on the same income, subject to the credit being capped at the domestic tax attributable to that income. The UK allows credit for Indian, US, and UAE taxes under treaty or unilateral relief. The US allows foreign tax credit via Form 1116. India allows credit for foreign tax via Form 67.
The credits are not applied automatically. You have to claim them in the right country, in the right year, on the right form. Failing to do so means paying twice for no reason.
Ignoring FBAR and FATCA if you are a US person
If you are a US citizen or green card holder with foreign bank accounts that collectively exceeded $10,000 at any point in the calendar year, you must file an FBAR, also known as FinCEN Form 114. This is separate from your tax return and is filed with FinCEN, not with Form 1040.
Missing it carries civil penalties that can exceed $10,000 per year for non-willful violations, depending on the year and IRS guidance. FATCA Form 8938 adds a separate reporting layer for foreign financial assets above threshold.
Many US-Indian professionals who hold NRE accounts, NRO accounts, and Indian equity portfolios have significant FBAR exposure they are not aware of. The NRE account balance counts. The NRO balance counts. Indian mutual funds may count. Indian stocks in a demat account may count.
Treating NRE and NRO accounts as equivalent
NRE and NRO accounts serve different purposes and have very different tax treatment.
- NRE accounts are funded with foreign remittances. Interest is tax-free in India while non-resident under Section 10(4)(ii), and the funds are fully repatriable under FEMA.
- NRO accounts are for Indian-source income such as rent, dividends, pension, and sale proceeds. Interest is taxable at 30% plus applicable surcharge and cess, often around 31.2% for many NRIs, from the first rupee.
- NRO repatriation is restricted to USD 1 million per financial year with documentation.
- Using the wrong account for the wrong income, or misunderstanding which account is tax-free, can create tax and regulatory problems under FEMA.
Not getting a Tax Residency Certificate in time
If you live in the UAE, the UK, or the US and want to claim reduced withholding rates under a double tax treaty with India, your Indian payer needs a valid Tax Residency Certificate from your country of residence and your completed Form 10F, now filed electronically on India's e-Filing portal.
Without these, the payer applies full domestic NRI TDS rates, such as around 31.2% on NRO interest, 20% plus cess on many dividends, and higher domestic NRI rates on long-term property gains.
You can claim a refund of excess TDS when you file your Indian return using ITR-2 or ITR-3. Many people do not file because they assume TDS is the final tax, do not know a refund is available, or simply miss the filing step.
Assuming the UAE is tax-free for US persons
It is not. The US has no income tax treaty with the UAE. US citizens and green card holders living in Dubai remain taxable on worldwide income.
The Foreign Earned Income Exclusion and Foreign Tax Credit provide unilateral relief, but there is no treaty framework. Annual Form 1040 filing, FBAR, and FATCA reporting continue regardless of UAE residency.
Missing the Indian capital gains changes from 23 July 2024
The Finance Act 2024 changed the capital gains structure for Indian assets significantly. Many NRIs are still operating on old assumptions.
For transactions on or after 23 July 2024, the changed rates apply to NRIs as well as residents.
- LTCG on listed equity above Rs 1.25 lakh: 12.5%, up from 10% above Rs 1 lakh.
- STCG on listed equity: 20%, up from 15%.
- Property LTCG: 12.5% without indexation.
- For property acquired before 23 July 2024, you can choose between 12.5% without indexation or 20% with indexation, whichever produces the lower tax liability.
Selling UK assets shortly after departure
The UK has temporary non-residence rules that can catch people who move abroad and immediately sell UK assets, including stocks, property, and business interests, expecting to pay no UK CGT as a non-resident.
If you return to the UK within five years of departure, certain gains realised while non-resident can be pulled back into UK tax. Asset sales in the first years after leaving the UK need careful planning around these rules.
Leaving equity compensation to chance
ESOPs, RSUs, and carried interest spanning multiple countries create some of the most complex cross-border tax situations in practice. Income must be sourced to the country where services were performed, not where you lived when the shares vested.
A grant from an Indian employer, vesting during UK employment, and sold while based in the UAE can involve three countries' rules, two or three treaty interactions, and multiple filing deadlines. Getting the allocation wrong, either the income characterisation or the credit mechanics, is expensive.