What is the difference between worldwide and territorial taxation?

Two models

The way a country defines its tax base is one of the most consequential choices for internationally mobile people and businesses.

Worldwide taxation

Residents are taxed on their global income, regardless of where it is earned. Foreign tax credits or treaties usually offset double taxation. Examples:

• United States — worldwide; 37% top personal rate (and uniquely taxes citizens abroad).
• United Kingdom — worldwide; 45% top personal rate.
• Germany — worldwide; 45% top personal rate.
• Portugal — worldwide; 48% top personal rate.

Territorial taxation

Only income sourced within the country is taxed; foreign-source income is generally outside the net. Examples:

• Singapore — territorial; 20% top personal rate.
• Hong Kong — territorial; 16% top personal rate.

Why it matters

For someone earning abroad, a territorial base can leave foreign income untaxed locally, while a worldwide base brings it all into charge (subject to credits). Beyond these two models sit no-income-tax jurisdictions like the UAE and Monaco, which tax neither local nor foreign personal income.

Data basis: Government tax authority data via taxesmap.app, as of 2026