How do avoidance of double taxation agreements work?

Double taxation agreements (DTAs) are an important part of international tax law. In essence, these agreements allow countries to avoid double taxation of their citizens on income and capital gains earned abroad. New Hampshire is one of many states that have adopted DTA provisions. Under these agreements, each country agrees not to tax certain types of income and capital gains earned by its citizens in other countries. Instead, those income and capital gains are taxed only by the country in which the money was earned. This means that citizens of New Hampshire (or any other country that has a DTA with another country) can avoid having to pay taxes to two different countries for the same income. In addition to avoiding double taxation, DTAs can also provide other benefits to citizens of both countries. For example, the agreement between the US and other countries generally provide for a certain reduction in taxes on income and capital gains earned abroad. This reduces the overall tax burden for taxpayers in both countries. Also, certain DTAs may allow for the complete exemption of taxes on certain income and capital gains, or for other tax relief. Overall, DTAs are beneficial for both countries involved, as they ensure that both citizens are not burdened with double taxation of their income and capital gains earned abroad. They also provide tax relief and other benefits for citizens of both countries.

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How do avoidance of double taxation agreements work?

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