Expat Tax Guide for Americans in the Dominican Republic
- Living as an Expat in the Dominican Republic
- Dominican Republic at a Glance
- What Are Expat Taxes like for Americans Living in the Dominican Republic?
- Who Has to File Taxes in the Dominican Republic?
- Who Qualifies as a Tax Resident in the Dominican Republic?
- What Types of Taxation Does the Dominican Republic Have?
- When Are Taxes Due in the Dominican Republic?
- Essential Tax Forms for US Expats in the Dominican Republic
- Does the US Have a Tax Treaty with the Dominican Republic?
- Does the US Have a Totalization Agreement with the Dominican Republic?
- What If I’m Behind on Filing My US Expat Taxes?
- Navigating Tax Compliance for US Expats in the Dominican Republic
Living as an Expat in the Dominican Republic
Living as an expat in the Dominican Republic can be an exciting adventure. The country offers a warm climate, beautiful beaches, and a rich culture. As a US expat, it’s important to consider the cost of living, healthcare, and safety.
The cost of living in the Dominican Republic is generally lower than in many other countries, but it can vary depending on the location and lifestyle. Healthcare in the country is improving, but it can be limited in some areas. It’s important to obtain health insurance before arriving in the country or enrolling in the Dominican Republic’s public healthcare system.
Expats should also take precautions to ensure their safety. The Dominican Republic has a high crime rate, and theft, fraud, and violent crime can occur. It’s important to be aware of your surroundings, avoid carrying large amounts of cash, and use common sense when traveling.
Of course, when moving abroad, knowing what taxes you can expect is always essential. In this guide, we’re going to look at how the Dominican Republic taxes expats.
Dominican Republic at a Glance
- Primary Tax Form for Residents: ‘Declaración Jurada Anual del Impuesto sobre la Renta’ or Annual Income Tax Return
- Tax Year: January 1–December 31
- Tax Deadline: March 31
- Currency: Dominican peso (DOP)
- Population: 10.6 million
- Number of US Expats: Estimated 25,000
- Capital City: Santo Domingo
- Primary Language: Spanish
- Tax Treaty: No
- Totalization Agreement: No
What Are Expat Taxes like for Americans Living in the Dominican Republic?
Before talking about Dominican taxes, it’s worth noting that expats living in the Dominican Republic still have US tax obligations. Every US citizen is required to file a US tax return every year, regardless of where they live. Whether you’ve made your home in San Diego or Santo Domingo, you still have to report your income to the IRS.
Of course, if you live in Santo Domingo (or anywhere else in the Dominican Republic), you will probably also have to file a Dominican tax return. The good news is that the Dominican Republic is known for its low tax rates.
Who Has to File Taxes in the Dominican Republic?
The Dominican Republic taxes expats differently based on whether they qualify as residents for tax purposes.
- Expats who are considered non-residents are only taxed on income that comes from a Dominican source.
- Expats who have been residents for three years or less are also taxed on income that comes from a Dominican source.
- Expats who have been residents for more than three years are taxed on their worldwide income.
As an expat in the Dominican Republic, you may wonder if you need to file an annual tax return. If you have only received traditional employment income from a Dominican employer, your taxes will be withheld at the source, and you won’t need to file an annual return.
However, if you have received other types of income, such as foreign employment income, self-employment income, interest, or capital gains, you will need to file an annual return. These sources of income are not subject to withholding, so they must be reported on your annual return.
It’s important to note that even if you are not required to file an annual return, you may still need to file other tax forms or meet other reporting obligations.
Who Qualifies as a Tax Resident in the Dominican Republic?
The Dominican Republic will consider you a resident for tax purposes if you spend more than 182 days in the country in a single year. These days do not have to be consecutive. Until you meet this standard, you will be considered a non-resident.
What Types of Taxation Does the Dominican Republic Have?
The Dominican Republic taxes income at progressive rates ranging from 0% to 25%. In the table below, you can see the rates for the Dominican income tax. (All amounts are given in DOP.)
|Taxable Income (DOP)||Tax Rate|
|0 – 416,220||0%|
|416,220 – 624,329||15%|
|624,329 – 867,123||20%|
|867,123 and above||25%|
Taxable income includes both cash and non-cash compensation, such as the following categories:
- Employment earnings
- Self-employment earnings
- Capital gains
- Housing stipends
- Meal and clothing allowances
- Reimbursement for education, travel, and other professional expenses
There are no local income taxes in the Dominican Republic. All income is taxed at the national level only.
Social Security Tax
Every employee and employer in the Dominican Republic is required to contribute to the Dominican social security system. This applies to residents and non-residents alike. The rate for this tax comes to roughly 21.3% of an employee’s salary, with both employer and employee contributions. The breakdown for that rate is as follows:
- Pension contributions: 7.10% from the employer and 2.87% from the employee
- Family healthcare contributions: 7.09% from the employer and 3.04% from the employee
- Labor risk insurance contributions: 1.2% from the employer
All told, the employer contributes 15.39% in social security taxes, while the employee contributes 5.91%.
Capital Gains Tax
The Dominican Republic treats capital gains as ordinary income and taxes them accordingly.
Real Estate Tax
Real estate is taxed at 1% of the total value of the property exceeding approximately 6.85 million DOP. (The exemption amount changes every year to account for inflation.)
The Dominican Republic imposes a value-added tax (VAT) on certain goods and services. The standard rate for this tax is 18%.
Inheritance is taxed at a flat rate of 3%, payable by the successors and beneficiaries.
Gifts are taxed at a flat rate of 27%, payable by the recipient.
Technical Education Tax
A fund financing technical instruction and training for workers requires both employers and employees to contribute. The employer must pay 1% of the total monthly payroll, while the employee must pay 0.5% of any benefits received.
When Are Taxes Due in the Dominican Republic?
Just like in the US, the Dominican tax year is aligned with the calendar year—January 1 to December 31. Individual tax returns are due by March 31 of the following year.
Essential Tax Forms for US Expats in the Dominican Republic
If you’re a US expat living in the Dominican Republic, it’s important to be aware of your tax obligations in both countries. Individuals must file Form 606 annually by March 31st in the Dominican Republic, which is the primary tax form for reporting income. This form is utilized to report income and deductions for the previous tax year.
In addition to Form 606, US expats may also be required to file a US income tax return and the Foreign Bank Account Report (FBAR) if they have a foreign bank account with an aggregate balance of $10,000 or more at any point during the tax year.
Failing to comply with tax regulations can result in penalties and fines. Therefore, it’s essential to stay informed about your tax obligations and deadlines to avoid any legal and financial consequences.
Does the US Have a Tax Treaty with the Dominican Republic?
No, there is currently no US-Dominican tax treaty. This leaves Americans living in the Dominican Republic at risk of being taxed twice on their income. Fortunately, the IRS provides several tax benefits to help expats avoid double taxation.
Does the US Have a Totalization Agreement with the Dominican Republic?
No. The US and the Dominican Republic do not currently have a totalization agreement in place. Americans living and working in the Dominican Republic may have to contribute to both nations’ social security systems.
What If I’m Behind on Filing My US Expat Taxes?
Every US citizen is required to file an annual US tax return. This applies regardless of where you live. However, if you didn’t know that, you’re far from alone. Many Americans living overseas are unaware of this tax obligation.
Fortunately, the IRS provides an amnesty program to help expats come into compliance without facing any penalties. It’s known as the Streamlined Filing Compliance Procedures.
To use this program, all you have to do is:
- Self-certify that your failure to file was an accident, not a willful refusal
- File the last three delinquent income tax returns and pay any delinquent taxes you owed during that time (with interest)
- File Foreign Bank Account Reports (FBARs) for the last six years
This will bring you into compliance with IRS regulations.
Navigating Tax Compliance for US Expats in the Dominican Republic
With a better understanding of how the Dominican Republic taxes US expats, you can confidently meet your international tax obligations. However, if you have any lingering questions, our team of expert CPAs and IRS Enrolled Agents are available to provide you with the guidance you need. In fact, we can even prepare and file your expat tax return on your behalf.
If you’re ready to be matched with a Greenback accountant, click the get started button below. For general questions on expat taxes or working with Greenback, contact our Customer Champions.