Dreaming of travelling, living and working in a new destination? We’ve got you. A working holiday is the perfect way to experience new cultures while providing a cost-efficient way to travel. No matter where you travel, it’s super important that every working holidaymaker comes to terms with the local tax system. After all, while you may be able to escape the paved streets and grey skies, the taxman is sure to follow you!
The good news is that countless working holidaymakers around the world are entitled to claim a tax refund at the end of the year. With that in mind, we’ve teamed up with Taxback.com to share some top tips on how to claim back that tax!
Before the backpacker tax was introduced in 2017, working holidaymakers were entitled to earn $18,200 tax-free. However, only Australian citizens and residents can now claim this credit. Boo! The backpacker tax had a big effect on working holidaymakers in Australia. Backpackers in Australia are now taxed at 15% from the first dollar earned. This is waaay higher than the tax rate charged to locals.
Confused? Let’s take a look at an example using 2021 tax rates.
- John worked in Australia for the full tax year, earning AU$30,000. He is entitled to benefit from the tax-free threshold. His income tax bill is AU$2,242.
- Meanwhile, Jane is a backpacker in Australia. She also worked in Australia for the full tax year and earned AU$30,000. However, she is not entitled to the tax-free threshold. Therefore her income tax bill is $4,500.
- Note: both John and Jane will need to pay a Medicare levy of AU$ 600
While this is a higher tax rate than Australian citizens, the good news is that many working holidaymakers are entitled to claim a tax refund at the end of the tax year. But, in order to claim your tax refund, you must file your tax return. Yep, get ready for A LOT of paperwork.
In short, working holidaymakers can apply for a tax refund and may be eligible for the tax-free allowance if:
- They are a holder of a visa subclass 417 Working Holiday or 462 Work and Holiday
- They are a resident of Australia for tax purposes for the entire (or part of) income year.
- They are from one of the following countries:
- Chile
- Finland
- Germany
- Israel
- Japan
- Norway
- Turkey
- United Kingdom
Typically speaking, every temporary visa holder is considered a non-resident for tax when they arrive in Australia. However, factors such as how long you’ve been in the country and your behaviour while you’re in Australia can influence whether you will be seen as a resident. So don’t go getting arrested for drunken rowdiness!
If you’re visiting Australia for longer than six months, live in the same place and establish ties with the local community, you’ll likely be considered an Australian resident for tax purposes. Result! The average Australian tax refund is $2,600 so it’s definitely worth checking with Taxback.com whether or not you’re due tax back.
Superannuation
If you earn over $450 per month in Australia, your employer will pay 9.5% of your wages into a superannuation fund on your behalf. This is the Australian retirement scheme and unless you plan on retiring in Australia, you can claim a good portion of it back when you leave and your visa has expired! You can always cancel it if you don’t intend on returning.
To claim your tax back in Australia you’ll need:
- Final payslips for each job
- Your TFN (or ABN if you had one)
- Copy of Your ID
Australia Tax Facts:
- End of Oz tax year is 30 June
- You should submit a tax return at the end of the tax year
- If you become a resident for tax purposes, you can claim tax back
- You can claim your superannuation when you leave
- You can get a free refund estimate with theOz online tax calculator
If you want to work here, you should apply for an IRD number so you’ll be taxed at the correct rate. Without an IRD, your income will be taxed at the highest rate possible. Once you find a job, your employer will give you aTax code declaration (IR330)form and this will tell them how much tax to deduct from your wages.
Taxes in New Zealand
If youwork in New Zealand, you’ll probably pay between 10.5% and 38% income tax on your earnings. Your residency status will affect how much tax you pay. You’re a non-resident employee if you are staying in New Zealand for 183 days or less in any 12-month period and as a non-resident, you’ll only be taxed on income from New Zealand sources.
If you stay in New Zealand for over 183 days , you’ll become a tax resident from the date you arrived and will be taxed on your worldwide income. You might find that you become a resident of New Zealand and another state, which could lead to your income being taxed twice. However, the government has negotiated a number of Double Taxation Agreements with other countries to decide which country can tax specific types of income so you don’t get taxed twice.
To claim your tax back in New Zealand you’ll need:
- Summary of earnings or final payslip
- A copy of your ID
New Zealand Tax Facts:
- Tax year runs from 1 April – 31 March of the following year
- You can go back as far as 2004 for a tax refund
- There are no payroll, healthcare, capital gains, social security, inheritance or state/local taxes
- Get a free NZ refund estimate with the New Zealand online tax calculator
First things first. You should apply for a Social Insurance Number when you get a job in Canada so your employer can tax you correctly.
Taxes in Canada
You’ll probably pay 15%-29% income tax on your wages. How much tax you pay depends on your residency status. Generally, if you’re a working holidaymaker you’ll be considered a non-resident and will only be taxed on Canadian sources of income.
You’ll be considered a non-resident for tax purposes if:
- You routinely live in another country and are not considered a resident of Canada
- You don’t have significant residential ties in Canada; and live outside Canada during the tax year
- You stay in Canada for less than 183 days in the tax year
If you pay tax in Canada, then you must file a tax return at the end of the tax year on 30 April of the following year.
To claim your tax back in Canada you’ll need:
- T4 (statement of remuneration) or final cumulative payslip
- Social Insurance Number
- Copy of ID
Canada Tax Facts:
- The tax year is from 1 Jan-31 Dec
- You have 10 years to apply for a tax refund
- You can apply for your tax back with the Canadian online tax calculator
When you start a job in the US, you’ll need to apply for a Social Security Number so you can be taxed correctly.
Taxes in the US
Generally if you’re on a work and travel program in the US, you’ll be considered a non-resident alien (hold the UFOs!) for tax purposes and will pay tax on your US sourced income only. Your US income is subject to federal taxes and in many cases, state taxes. You should file your tax return by 15 April after the end of the tax year.
Who must file tax documents in the US?
All non-residents in the US are required to file tax documents with the IRS. In short, if you earned an income while in the US, you must file a tax return. Even if you didn’t earn an income, you must still file form 8843. The good news is that many non-residents are entitled to claim a US tax refund each year. Result!
To claim your tax back in the USA you’ll need:
- Final cumulative payslip or W2 Form/1042-S
- Your social security number/ITIN number
What are these forms?
W2 form: This is a form you get from your employer stating your total earnings and amount of tax deducted.
1042-S form: Students, teachers or trainees on a J or F visa usually receive this form instead of a W2. It outlines the scholarships, fellowships or grants as well as tax treaties you’re entitled to.
USA Tax Facts:
- Tax year is 1 Jan-31 December
- Non-resident aliens should file a Form 1040NR
- You must claim a refund within 3 years
- Try the US J1 online tax refund calculator
If you intend to work in the UK, you should apply for a National Insurance Number (NIN) when you arrive. This will ensure you are taxed correctly.
Taxes in the UK
Typically if you are present in the UK for 183 days or more in a tax year you will be considered a resident in the UK. The ‘’Statutory ‘Residence Test’’ can also help you determine whether you are a resident or not.
Residents normally pay UKtaxon all their income, whether it’s from the UK or abroad, but the UK has double taxation agreements with a number of countries to prevent foreign workers from being taxed twice. Non-residents only pay tax on their UK sourced income.
The standard Personal Allowance is £12,570, which is how much you can earn before you pay tax. There is no Personal Allowance on taxable income over £125,140.
You may be due a tax refund if:
- You arrive in the UK part way through the tax year
- You left before the end of the tax year
- Your employer used an incorrect PAYE code
- You had one or more job in the same UK tax year
To claim your tax back in the UK you’ll need:
- Documents from your employer (P45, P60, P11D)
- Your ID
UK Tax Facts:
- Tax year runs from 6 April- 5 April of the following year
- Get your free UK tax refund using the online UK tax rebate calculator
If you want to work here, you should apply for a PPS number (Personal Public Service Number) and complete a Form 12A and send it to Revenue (the tax authority) when you arrive so you can get a tax credit certificate before you start working. This will help you avoid paying emergency tax.
Taxes in Ireland
In Ireland, tax is charged as a percentage of your income so what you pay depends on what you earn. Up to a certain amount is taxed at the standard rate of 20%. Anything above this amount is chargeable at thehigher rate of tax– 40%.
Your liability for tax in Ireland is based on three things – your residency, ordinary residency and domicile status.
You are resident for tax purposes in a year if:
- You are present for 183 days or more from 1 Jan-31 Dec or
- You are present for 280 days or more in that tax year plus the previous tax year taken together, with a minimum of 30 days in each year
If you are resident and domicile in a particular tax year, you’ll be taxed on your worldwide income earned in that year. Non-domiciles (usually non-Irish citizens) are taxable on their Irish sourced income plus remittances of any foreign income. For any year that you are non-resident and non-ordinarily resident, you’ll usually only be taxed on your Irish sourced income.
Double taxation agreements
If you become resident in Ireland and are taxable in another jurisdiction at the same time, you may be able to avoid paying tax on your income in Ireland or abroad due to a double taxation treaty. Alternatively, if your income is taxable in both jurisdictions, relief may be available in the form of a deduction or tax credit.
Usually, you can either:
- Exempt the income from tax in one country or
- Allow credit in one country for the tax paid in the other
You may be due a tax refund if:
- You only worked part of the year
- You changed jobs during the year
- You were made redundant
- You had medical expenses
- You were taxed at the emergency rate
To claim your tax back in Ireland you’ll need:
- PPS Number
- Copy of your ID
- Your expense receipts
Ireland Tax Facts:
- The average Irish tax refund is €1,076, Get your free tax refund estimate using theIrish online tax refund calculator
Taxes in Japan
Employees in Japan pay around 10% and 40% income tax depending on their earnings. Both Japanese nationals and foreign residents in Japan who have registered with a local municipality will be assigned a 12-digit number for tax purposes. Short-term visitors will not be eligible for a number.
Resident
If you live in Japan for one year or more you’ll be considered a resident. In this case, your worldwide income is subject to tax.
Non-resident
If you’re only in Japan for the short-term and are not considered domicile (domicile refers to the principal base and center of one’s life), you will only be liable for income sourced within Japan.
Pension fund
If you pay tax in Japan, it’s also likely that you’ll pay into a pension fund. You can apply for a refund of this when you leave and up to two years after. The Japanese Insurance Agency will withhold 20% worth of tax off your pension refund when you apply.
To claim your tax back in Japan you’ll need:
- Your Gensen-Choshu-Hyo (an official tax form you get from your employer at the end of the tax year outlining earnings and tax paid)
- Your ID
- For your pension refund: A copy of your pension book or pension number
Japan Tax Facts:
- The tax year runs from 1 Jan-31 Dec
- Returns must be filed between 16 Feb and 15 March
- Japan has double taxation treaties with many countries to help you avoid being taxed twice
- You can apply for your tax refund estimate using the online Japanese tax refund calculator
If you want to work here, you’ll need a Tax Identification Number (Identifikationsnummer). The first step is to register your address at the local registration office in your city hall or town.You’ll need your passport, visa, and a copy of the lease or rental agreement. Once you’ve completed your registration, the federal tax authority will send out your Tax ID within 2-3 weeks.
Taxes in Germany
Germany has progressive tax rates based on income. Employees in Germany can pay up to 42.5% income tax on their earnings. German taxpayers pay income tax on their German income only, however the tax rate applied takes in account worldwide income and assets.
You may be due tax back if:
- Your income was under the tax free allowance
- You didn’t work the whole year
- You paid rent in Germany and your home country
- You paid for flights to or from Germany
- You incurred work related expenses such as travel costs
- Your spouse was living in EU-home country while you were working in Germany
To claim your tax back in Germany you’ll need:
- Your (official government form from your employer)
- Copy of ID
- Steueridentificationsnummer (a tax identification number) if you have one
Tax facts
- The deadline to file a tax return is 31 May of the following year (automatically extended to 31 Dec if your taxreturn is prepared by ataxprofessional). Otherwise you can go back four years when filing your tax return
- Get your free German tax refund estimate
If you work in the Netherlands, you’ll need a Citizen Service Number (burgerservicenummer or BSN), which you can get when you register in your local city or town hall.
Taxes in the Netherlands
Employees in the Netherlands can pay up to a whopping 52% tax on their earnings. How much you pay depends largely on your income.Resident taxpayers are taxed on their worldwide income and non-resident taxpayers are only subject to tax for certain specific categories of income from Dutch sources.The tax rates are the same for residents and non-residents, but there are some differences with respect to the entitlement to deductions, allowances and tax credits.
Tax deductions
As of 2015, you are entitled to deductible items, tax credits and the tax-free allowance only if you meet all three of the following criteria:
- You live in an EU country, Liechtenstein, Bonaire, Sint Eustatius or Saba, Norway, Iceland, Switzerland
- You pay tax in the Netherlands on at least 90% of your worldwide income
- You can submit a personal income statement from the tax authorities in your country of residence
In the above case, you may be due a refund if:
- You only work part of the year
- You took an extra job
- You were granted the 30% ruling – meaning you got a tax-free expense allowance of up to 30% of your salary from your employer
To claim your tax back in the Netherlands you’ll need:
- Your Jaaropgaaf or Statement of Earnings
- A copy of your ID
Netherlands Tax Facts:
- Tax year is from 1 Jan to 31 Dec
- Get your free Dutch tax refund estimate
If you want to stay more than three months in Belgium, you should to go to your local municipal administration office/town hall (maison communale/gemeentehuis) within eight working days to be registered on the Foreigner’s Register and get your residence card.
Taxes in Belgium
If you want to work in Belgium, you must pay taxes and file a tax return. Taxes in Belgium are high, amounting to a rate of more than 50% for the highest earners.If you live in Belgium for six months minimum during the tax year and register with your local commune, then you will be considered resident and will be taxed on your worldwide income.
If you live in Belgium for less than six months (183 days), then you are classed as a non-resident and must pay income tax on your Belgium income only.
If you are non-resident and earn Belgian sourced income, then you must inform your competent tax collector’s office, who will send you a tax return. Income tax and company tax are collected at state level but the municipal authorities also collect property tax and municipal tax.
Filing your tax return
You should receive a tax return in May–June(déclaration/aangifte) for the previous year’s income.For residents, this is usually filed at the end of June and September/October for non-residents.
You could be entitled to get tax back if:
- You didn’t work in Belgium during the whole calendar year
- Your annual income is under the tax-free allowance
- Your Belgian income is more than 75% of your annual worldwide income
To claim your tax back in Belgium you’ll need:
- Loonfiche 281.10/ Fiche de Remuneration 281.10 you get from your employer at the end of the tax year
- Copy of your ID
Belgium Tax Facts:
- The tax year is 1 Jan to 31 December
- Apply for your Belgium tax back
If you stay longer than three months, you must register at the municipal administration in your area of residence.
Taxes in Luxembourg
Luxembourg has one of the lowest tax rates in Europe. If you work in Luxembourg, depending on your income, you could havea rateof between 8%-35% tax deducted from your income. Each year, Luxembourg employees get a tax card stating their tax classes based on their personal status. This then corresponds to progressive tax rates.
You are considered resident for tax purposes in Luxembourg if:
- You are fiscally domiciled in Luxembourg and
- Resident in Luxembourg for more than nine months per year
If you are a resident for tax purposes you will be taxed on your worldwide income but non-residents are only taxed on their Luxembourg sourced income.
Tax classes:
Class 1: Single persons
Class 2: Married or on a civil partnership
Class 1a: Single persons with children as well as single taxpayers aged at least 65 on 1 Jan of the tax year
You may be able to claim a refund if:
- You worked temporarily or had a part time job in Luxembourg
- You worked for more than one employer
- You worked more than nine months in Luxembourg
- Your annual income is under the tax-free allowance
- Your income from Luxembourg is more than 75% of your annual worldwide income
To claim your tax back in Luxembourg you’ll need:
- Certificat de Remuneration/Certificat de Salaire ou de Pension
- Copy of ID
Luxembourg Tax Facts:
- Tax year is 1 Jan to 31 Dec
- Claim your Luxembourg tax back
If you’re coming to Denmark to live and work for three months or longer (six months for EU/EEA/Swiss citizens), you need to apply for a civil registration number (CPR) at the Danish National Register.If you intend to stay for three months or less (six months or less if EU/EEA/Swiss citizen), you will get a personal tax number instead of a CPR number.
You can apply for a personal tax number online or at one of the International Citizen Service Centres and will receive a preliminary income assessment along with your tax number.Once you take up residence in Denmark, your personal tax number becomes your CPR number.
Taxes in Denmark
In Denmark, there’s a difference between full tax liability and limited tax liability. For full tax liability, you must be resident in Denmark or stay in the country for at least six months consecutively.If you are not resident in Denmark but are earning income in the country, you may be subject to limited tax liability.
If you stay for six months or more, you will most likely pay tax on all your income in Denmark and abroad, with the exceptions being students and tourists. Denmark also has a network of double taxation agreements with certain countries. The tax rates are based on categories of income and each category has a different tax rate.
You could be due a tax refund from Denmark if:
- You were employed on a limited-term contract
- You paid for food and accommodation
- You kept your residence in your home country while working in Denmark
To claim your tax back in Denmark you’ll need:
- Your Årsopgørelse, an official government document you get from the Danish tax office
- Your ID
Denmark Tax Facts:
- Tax year runs from 1 Jan to 31 December
- You can get a free tax refund estimate using the online Danish tax refund calculator
How to claim your tax back
If you need a hassle-free way of applying for your tax back, you can use a professional tax preparer likeTaxback.com, an ISO certified tax preparer, offering tax refunds from 12 countries. You can get a free, no-obligation refund estimate using their online tax calculators.
Keep reading:
A Guide to a working holiday in Australia
A guide to a working holiday in New Zealand
Best travel jobs to make money while travelling
Thanks to Les Haines, Nicolas Raymond& Nelson L for their great Flickr pics!
