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Applying the Saving Clause and Exceptions in U.S. Income Tax Treaties

Note: CLE credit is not offered on this program

Recording of a 110-minute CPE webinar with Q&A

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Conducted on Thursday, September 7, 2023

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This webinar will discuss the application of the saving clause in U.S. international income tax treaties. Our panel of foreign tax matter experts will identify the saving clause in U.S. income tax treaties, analyze saving clause exceptions, and provide examples of the application of the saving clause and exceptions in specific countries.


"Most tax treaties have a saving clause that preserves the right of each country to tax its own citizens and treaty residents as if no tax treaty were in effect"--the IRS. This preserves the U.S.' ability to tax its citizens and long-term residents living abroad. For example, a U.S. taxpayer may conclude, after reviewing a U.S. income tax treaty, that retirement income is taxed only in the country of residence. However, an overlooked saving clause would negate this.

As there is a saving clause in most U.S. income tax treaties, there are also exceptions. Among these could be transactions between related parties, retirement, or Social Security income. These exceptions are critical. Often, there is no consistency in the treatment of certain income items, most notably pensions and Social Security benefits. For example, the U.S. treaty with Portugal allows both the U.S. and Portugal to tax Social Security benefits.

The saving clause and its exceptions can significantly impact the tax consequences of income earned by multinational taxpayers. Here, a foreign tax credit can offset the consequences of double taxation. A careful reading and interpretation of the relative U.S. income tax treaty is essential to properly tax global residents.

Listen as our panel of distinguished international tax advisers reviews the application of the saving clause found in international tax treaties.



  1. Saving clause: an introduction
  2. Defined
  3. Exceptions
  4. Treaty benefits
  5. Foreign tax credit
  6. Applying the saving clause, examples


The panel will cover these and other pertinent issues:

  • Determining how the saving clause impacts taxation of U.S. citizens residing outside the U.S.
  • Applying the saving clause to Social Security and pension benefits in specific countries
  • Common exceptions to the saving clause in U.S. income tax treaties
  • Using the foreign tax credit to negate double taxation


Kennedy-C. Edward
C. Edward (Ed) Kennedy, Jr., CPA, JD

Managing Director
C Edward Kennedy Jr

Mr. Kennedy has more than 42 years of experience dealing with a variety of international tax matters, specializing...  |  Read More

McCormick, Patrick
Patrick J. McCormick, J.D., LL.M.

Founder/Managing Partner
McCormick Tax

Mr. McCormick specializes in the areas of international taxation, tax compliance, and offshore reporting...  |  Read More

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